201-203

Question 1

index numbers

Answer 1

start with 100 and then the value / year before value x 100

Question 2

interpreting price elasticity of demand

Answer 2

(normally negative)
0-1 =price inelastic = demand changes by smaller % than price

1+ = price elastic = demand changes by a larger % than price

1 = unitary = demand changes by same % as price

Question 3

factors affecting ped

Answer 3

brand loyalty - price inelastic
availability of substitutes - price elastic if substitutes
luxury/necessity - inelastic if necessity

Question 4

interpreting income elasticity of demand p1

Answer 4

positive answer = normal/luxury goods = demand increases as incomes increase and vice versa

negative answer = inferior goods = demand decreases as incomes increase

Question 5

interpreting income elasticity of demand p2

Answer 5

0-1 =income inelastic = demand changes by a smaller promotion to income
1+ = income elastic = demand changes by a larger proportion to income

Question 6

usefulness of time-series analysis

Answer 6

+ smooths out anomalies in past data so trends can easily be seen
+ based on actual trends and data so more accurate
+ useful for predictions
- historical data not always good for future
- doesn’t take into account external factors / knowledge of future
- can’t predict too far into future so bad for long term

Question 7

the delphi method

Answer 7

group of experts more accurate than ordinal individuals
so experts respond to several rounds of open ended questionnaires and responses are compiled and shared with group after each round
experts can respond to each others opinions until a group agreement is formed about decisions for future
experts don’t know each others identity

Question 8

delphi method + and -

Answer 8

+ time to think through their ideas = better quality of response
+ record of experts group responses and ideas to use when needed
+ flexible
- assumes experts are willing to come to a consensus and allow opinions to be altered
- time consuming