PED Flashcards
1
Q
Price elasticity if demand def
A
Measures responsiveness of quantity demanded for a product to change in price
2
Q
PED formula
A
%change in quantity demanded/ % change in price
3
Q
Value of PED is more than 1
A
Elastic price
4
Q
Value of PED is less than 1
A
Price inelastic
5
Q
Value of PED is exactly 1
A
Unitary price elasticity
6
Q
Dynamic pricing
A
Prices are flexible based on current market demands
7
Q
Factors affecting PED
A
Brand strength, necessity, habit
8
Q
Why does PED matter
A
If price elastic, changes in price will cause change in demand, revenue would fall as price increases
9
Q
Limitations of using PED
A
Difficult to get reliable data, other factors may be affecting demand, competitors will react
10
Q
How to work out percentage change
A
New - old / old X 100
