3.2h Price Elasticity of Demand (2)

Question 1

Should a business aim to have elastic or inelastic products?

Answer 1

Inelastic

Question 2

What effects PED of a product?

Answer 2

• Percentage of consumers income allocated to spending on good
• Brand loyalty
• Addictiveness
• Degree of necessity or whether good is a luxury
• Time period allowed following price change
• Number of close substitutes

Question 3

How to ensure products are price inelastic

Answer 3

• Make product different
• Be affordable
• Sell a necessity