PED

Question 1

PED

Answer 1

%change in quantity demanded/ % change in price

Question 2

A price elasticity of demand is usually..

Answer 2

Negative because demand falls as price increases for most goods

Question 3

Elastic (relatively elastic) demand number

Answer 3

PED>1

% change in price will cause a larger % change in quantity demanded

Question 4

The higher the value of PED

Answer 4

The more elastic demand is for the good

Question 5

If the PED is -7.5

Answer 5

This means that a 1% change in price leads to a 7.5% change in demand

Question 6

Perfectly elastic demand has a PED of

Answer 6

Infinity and any increase in price means that demand will fall to zero; consumers are willing to buy all they can obtain at P but none at a higher price.

Question 7

Inelastic (relatively inelastic) demand number

Answer 7

0

Question 8

Perfectly inelastic demand has a PED of

Answer 8

0 and a change in price will have no effect on the quantity demanded

Question 9

Unit elasticity of demand number

Answer 9

+-1
If the size of the % change in price is equal to the size of the percentage change in quantity demanded e.g. A 20% decrease in price will lead to a 20% increase in quantity demanded