1.23, 1.16, 1.2.10 Flashcards
1
Q
What is PED
A
- The degree of responsiveness of demand to change in price
2
Q
If demand is very responsive to price
A
Price elastic
3
Q
If demand is very unresponsive
A
Price inelastic
4
Q
If PED is = 0
A
Perfectily inelastic
5
Q
If PED = infinity
A
demand is perfectly elastic
6
Q
Key factors affecting PED
A
- Necessity
- Addiction and habit
- Substitutes
- Brand loyalty
- Proportion of income
- time period
- Percentage of income spent on product
- Habitual bahavoir
- Breadth of the market
7
Q
Unitary elastasticity
A
When PED = 1
8
Q
A
