1/3 - Price elasticity of demand Flashcards
1
Q
What does PED measure?
A
How a products demand changes in response to a price change.
2
Q
A product is price inelastic if the price elasticity is…
A
Greater than 1.
3
Q
A product is price elastic if the price elasticity is…
A
Smaller than 1.
4
Q
If a product is price elastic then a small increase in price will cause…
A
A large fall in demand.
5
Q
If a product is price elastic then a small decrease in price will cause…
A
A large increase in demand.
6
Q
If a product is price inelastic then a small increase in price will cause…
A
A small fall in demand.
7
Q
If a product is price elastic then a small decrease in price will cause…
A
A small increase in demand.
