Edexcel-Price Elasticity 1.2

Question 1

Price elasticity of demand

Answer 1

how responsive the change in quantity demanded will be to a change in price.

Question 2

What is the PED Value ?

Answer 2

Always negative

Question 3

PED Formula

Answer 3

% change in QD/ % Change in price

Question 4

Elastic

Answer 4

Demand is less responsive to a change in price

Question 5

Elastic value

Answer 5

More than 1

Question 6

Elastic product example

Answer 6

chocolate
bread
newspapers

Question 7

Inelastic

Answer 7

Demand is more responsive to a change in price

Question 8

Inelastic value

Answer 8

Between 0 and 1

Question 9

Inelastic product example

Answer 9

cigarettes
designer bags
season tickets

Question 10

Factors affecting PED

Answer 10

Availability of substitutes
Brand Loyalty
Proportion of income

Question 11

Availability of substitutes

Answer 11

More inelastic for goods with fewer substitutes

Question 12

Brand Loyalty

Answer 12

Make demand more price inelastic

Question 13

Proportion of income

Answer 13

Smaller the proportion of income more price inelastic

Question 14

What will businesses do for products which are price inelastic?

Answer 14

raise the price to increase revenue

Question 15

What will businesses do for products which are price elastic?

Answer 15

Lower the price to increase revenue

Question 16

Price elastic increase

Answer 16

Decrease total revenue

Question 17

Price inelastic increase

Answer 17

Increase total revenue