Market system 1.1

Question 1

What is price insensitivity

Answer 1

When a goods price doesnt decrease or increase much due to external factors such as water only drops 5% because people dont wash their cars often

Question 2

what is price sensitivity

Answer 2

When a goods price decreases or increases much due to external factors, for example a food stall when people dont come to the beach much

Question 3

how to calculate price elasticity demand

Answer 3

PED = change in quantity demanded / change in price

Question 4

if the PED is less than 1 it is?

Answer 4

price inelastic

Question 5

if the PED is more than 1 it is?

Answer 5

Price elastic

Question 6

If the PED is exactly 1 it is?

Answer 6

unitary

Question 7

if the PED is exactly 0 it is

Answer 7

perfectly inelastic

Question 8

if the PED is infinity it is?

Answer 8

perfectly elastic

Question 9

how to calculate percentage change

Answer 9

(New price / old price) / (old price x 100)

Question 10

what effects the price elasticity (4)

Answer 10

proprotion of income spent on that product
nessecity
substitutes available
time