1. The Market System: Unit 8 -10 Flashcards
1
Q
- What is PED? (price elasticity of demand)
A
- PEd, is the responsiveness of demand to a change in price.
2
Q
How to calculate PED?
A
PED = % change in quantity demanded
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% change in price
3
Q
- What is inelastic demand?
A
inelastic demand is a change in price that results in a proportionately smaller change in the quantity demanded.
4
Q
- What is elastic demand?
A
change in price results in a greater change in the quantity demanded.(price elastic)
5
Q
- What are the 3 types of elasticity?
A
- perfectly elastic
- perfectly inelastic
- unitary elastic
6
Q
- What is perfectly elastic?(demand)
A
- demand where PED = infinity ( an increase in price will result in zero demand)
7
Q
- What is perfectly inelastic?(demand)
A
- demand where PED = 0. ( a change in price will result in no change in the quantity demanded)
8
Q
- What is unitary elasticity?(demand)
A
- where PED = - 1 (the responsiveness of demand is proportionately equal to the change in price)
9
Q
- What are the 4 factors affecting price elasticity of demand?
A
Time
Income
Necessity
Substitutes
10
Q
- What is the price elasticity of supply?(PES)
A
- price elasticity of supply is the responsiveness of supply to a change in price.
11
Q
- What is a fast-moving consumer good?(FMACG)
A
goods, especially food, that sell very quickly and in large amounts.
12
Q
- What is inelastic supply?
A
inelastic supply is the change in price that results in a proportionately smaller change in the quantity supplied.
13
Q
- What is elastic supply?
A
change in price results in a proportionately greater change in the quantity supplied.
14
Q
- What is unitary elasticity of supply?
A
- where PES = 1. a change in price will be matched by an identical change in the quantity supplied.
15
Q
- What are raw materials?
A
substances used to make a product.