1.2.4 PED Flashcards
1
Q
What is PED?
A
-Price Elasticity of Demand
-It measure the responsiveness of demand to a change in price
-Can either be elastic or inelastic
2
Q
What is the PED formula?
A
% Change in Quantity demanded / % Change in Price
3
Q
What is the % change in price formula
A
Price new - Price old / Price old X 100
4
Q
What is inelastic demand
A
Inelastic demand is for goods where if the price is changed the demand stays the same.
5
Q
When you calculate PED using the formula: If the result is between 0 and -1 this means that demand is…
A
Inelastic
6
Q
What are the factors influencing price elasticity of demand?
A
-Availability of substitutes
-Frequency of purchase
-Necessities (staple goods)
-Luxury goods
