PED and YED

Question 1

What does elastic demand mean?

Answer 1

Change in demand is greater than the change in price.

Question 2

What does inelastic mean?

Answer 2

Change in demand is less than the change in price.

Question 3

Are inelastic goods a necessity or a luxury?

Answer 3

Necessity.

Question 4

What factors effect PED?

Answer 4

• Necessity vs luxury.
• Substitute goods.
• Brand loyalty.

Question 5

What is the calculation for Price elasticity of demand?

Answer 5

%change in quantity demanded/ %change in price

Question 6

What is the percentage change calculation?

Answer 6

(new value - old value/ old value) x100

Question 7

What does it mean if price elasticity is more than one?

Answer 7

Change in demand is more than change in price

Question 8

What does it mean if price inelasticity is less than one?

Answer 8

Change in demand is less than the change in price.

Question 9

What does it mean if the unitary price elasticity is exactly one?

Answer 9

Change in demand = change in price.

Question 10

What does income elasticity of demand (YED) mean?

Answer 10

Measures the responsiveness of demand to a change in income.

Question 11

What is the calculation for YED?

Answer 11

%change in quantity demanded/ %change in income.

Question 12

What are the factors affecting YED?

Answer 12

• Necessities such as fuel, food etc.
• Luxuries, people will be plane tickets if they have more income.
• Price of product.