2.2 Price Elasticity Of Demand

Question 1

Price elasticity of demand

Answer 1

A measure of degree of responsiveness of changes in quantity demanded for of change in price of a product

Question 2

Types of responses towards PED

Answer 2

1. Inelastic
2. Elastic
3. Unitary elastic
4. Perfectly elastic
5. Perfectly inelastic

Question 3

Determinants of PED

Answer 3

1. Availability of substitutes
2. Nature of the good
3. Proportion of income spent

Question 4

Graphssss

Answer 4

Check out on notes regarding the changes in total expenditure when quantity demanded changes in response to price changes

Question 5

Essay Evaluation
How variation of PED determine the extent of changes in consumer surplus

Answer 5

• change in consumer surplus depends on the relative extent of the price change
• change in CS depends on the coefficient of PED
• it is assumed that price change is the only factor that determines a change in consumer surplus