Answer to Question #45303 in Microeconomics for Padma Ram

Question

Write detail explanation on "price elasticity of perfumes".

Answer 1

Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (ceteris paribus, i.e. holding constant all the other determinants of demand, such as income).
There are several factors that affect the price elasticity of a good. One of the factors is the degree of want for the good or service. Perfume is not considered something that you need for survival but if you're a diabetic, insulin is. So, the demand for perfumes is elastic.