PED Flashcards
1
Q
what is PED
A
Measures how responsive demand is to a change in price
2
Q
what does price elastic mean
A
price elastic means that a change in price leads to a more than proportional change in demand
3
Q
what does price inelastic mean
A
price inelastic means that a change in price will lead to a less than proportional change in demand `
4
Q
equation for PED
A
% change in quantity demands
% change in price
5
Q
if PED is between 0-1 it is?
A
inelastic
6
Q
if PED is < 1 it is?
A
elastic
7
Q
what are the the uses of PED
A
sales forecasting - know what effect an increase in price will have on demand
pricing strategy - help a firm decide how much they should charge
8
Q
what are examples of price inelastic products?
A
bread
petrol
cigarettes
9
Q
what are examples of price elastic products
A
designer clothes
