Which type of demand curve is represented when PED is greater than 1?

When the price elasticity of demand (PED) is greater than 1, it indicates that the quantity demanded is highly responsive to changes in price, which characterizes an elastic demand curve. This means that when the price increases, the quantity demanded decreases significantly and vice versa.

Consumers are more likely to adjust their purchasing behavior when the price changes, potentially because there are substitutes available or the product is not a necessity. For instance, if the price of a luxury good rises, many consumers may decide to forgo the purchase or switch to alternatives, resulting in a more than proportional change in quantity demanded relative to the change in price.

In contrast, an inelastic demand curve would show that quantity demanded changes very little with price changes, while a perfectly inelastic demand curve represents a situation where quantity demanded remains constant regardless of price changes. Unitary elastic demand means that the percentage change in quantity demanded is equal to the percentage change in price, which is not the case when PED is greater than 1.