3.2 understanding markets Flashcards
1
Q
What is price elasticity of demand equation?
A
%change in demand / % change in price
2
Q
What is income elasticity of demand equation?
A
Change in quantity demanded / change in income
3
Q
How to know if price inelastic or elastic?
A
If it has a 0 then its inelastic
4
Q
inelastic = insensitive which means?
A
customers will not respond to price change
5
Q
elastic = sensitive which means?
A
customers will respond to price change
6
Q
How can you attract people that are price sensitive?
A
Lower the price of the products
