The standard elasticity formula is simple, but students still throw away marks by writing the final number with no working.
Formula
PED = % change in quantity demanded / % change in price
Example
If price rises by 10% and quantity demanded falls by 20%, PED = -2. In an exam, show the substitution explicitly. That is safer than just writing “elastic”.
How to interpret it
- |PED| greater than 1 means demand is elastic
- |PED| less than 1 means demand is inelastic
- The negative sign reflects the inverse price relationship
Once you calculate it, connect it back to the case study. That is where the answer becomes IB Economics rather than pure arithmetic.
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