Price Elasticity of Electricity Demand - Department for Energy ...
Price Elasticity of Electricity Demand - Department for Energy ...
Price Elasticity of Electricity Demand - Department for Energy ...
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Definition 1 <strong>of</strong> PED<br />
Kentucky<br />
<strong>Energy</strong> and<br />
Environment<br />
Cabinet<br />
Executive<br />
Summary<br />
Variables<br />
Assumptions<br />
Conclusion<br />
Appendix<br />
Diagnostic Plots<br />
Models<br />
References<br />
This responsiveness is <strong>for</strong>mally called the price elasticity <strong>of</strong><br />
demand, denoted E d . It measures the percentage change<br />
in quantity demanded <strong>of</strong> a good, given a one percent<br />
increase in the price <strong>of</strong> that good.<br />
E d =<br />
% change in quantity<br />
% change in price<br />
= ∆Q/Q<br />
∆P/P<br />
Since economic’s “Law <strong>of</strong> <strong>Demand</strong>” implies an inverse<br />
relation between P and Q, E d ≤ 0 (data don’t always<br />
agree)<br />
Kentucky <strong>Energy</strong> and Environment Cabinet
Change language