PED (Price Elasticity of Demand)

Question 1

What is demand:

Answer 1

Demand is the amount of a product that consumers are willing and able to purchase at any given price

Question 2

What does PED stand for:

Answer 2

Price Elasticity of Demand

Question 3

Define what is PED:

Answer 3

PED represents the impact of that a change in price will have on the demand for a product.

Question 4

What does price elastic mean:

Answer 4

It means that demand is largely affected when there is a change in price

Question 5

What does price inelastic mean:

Answer 5

It means that demand isn’t largely affected when the price changes.

Question 6

How to calculate PED:

Answer 6

Percentage change in quantity demanded divided by percentage change in price

Question 7

How to calculate percentage change in quantity demanded and percentage change in price:

Answer 7

difference between the 2 numbers divided by original number x 100

Question 8

How to interpret price elasticity:

Answer 8

If the PED figure you get is greater than 1, then the product is price elastic. So if the PED figure is -2.5 then it is inelastic

Question 9

What are some factors influencing PED:

Answer 9

TIme
Competitiion
Branding
The proportion of income spent on a product - for high price products which attract wealthy consumers, they are likely to be inelastic.