1.2.4 Price Elasticity Of Demand

Question 1

What Factors affect PED? 

Answer 1

Good is luxury a Necessity

Time

proportion of income spent on items

substitute if there are no obvious substitute prices are inelastic

Brand loyalty

Question 2

What is the relationship like between PED and total revenue?

Answer 2

Inelastic good - price increases to the revenue will increase If price decreases demand bowl decrease

if it’s elastic when price goes up put a revenue goes down

price goes down total revenue goes up