PED 1.2.3

Question 1

Law of demand

Answer 1

when the price increases quantity demanded decreases

Question 2

PED

definition

Answer 2

measures thew responsiveness of quantity demanded given a change in price

Question 3

PED =

Answer 3

% change in quantity demanded / %change in price

Question 4

less than 1

Answer 4

demand is price inelastic

Question 5

elastic meaning

Answer 5

for any given price change there is a greater proportion of change in quantity demanded

Question 6

greater than 1

Answer 6

demand is price elastic

Question 7

inelatic meaning

Answer 7

when the price changes, quatity demanded will change but proportionatly less

Question 8

0

Answer 8

demand is perfectly price inelastic

Question 9

∞

Answer 9

demand is perfectly price elastic

Question 10

1

Answer 10

demand is unit price elestic

Question 11

SPLAT

Answer 11

subsitutes (no)
percentage of income
luxury/nessecity
addictiveness
time period

Question 12

substitutes

Answer 12

the more subsitutes there are the more price eleastic demand is going to be

the less substitues there the more price inelastic demand is going to be

Question 13

percentage of income

Answer 13

the greater the percentage of income that a price change takes, the more price elaastic demand is

Question 14

luxery or neccesity

Answer 14

luxery = more price elastic demand
neccessity = more price inelastic demand

Question 15

adictivness

Answer 15

inelastic

cigarettes

Question 16

time period

Answer 16

short run= demand is price inelastic. comsumers may not have enough time to look for alternatives

long run= demand is price elastic. more subsitutes become available