Price Elasticity of demand Flashcards
1
Q
What is the Price of Elasticity of demand formula (1 mark for psychically writing formula)
A
ΔP/P
2
Q
In terms of elasticity what does <1 & >1 mean
A
<1 means that the product is not elastic, meaning it is not as responsive the changes in price (branded goods, food, water)
> 1 means that the product is elastic, meaning that it is responsive to changes in price
Exactly 1, demand has Unit elasticity
3
Q
Price Elasticity (Define)
A
Price elasticity of demand measures the degree of responsiveness of the quantity demanded of a good to changes in price
4
Q
How to answer Price elasticity of demand Q’s
A
- Define what price elasticity
is (1 Mark) - Write out formula for 1
mark - Do calculation
- Answer to formula is it Elastic or Non-elastic (1 Mark)
5
Q
Why do branded goods not follow PeD
A
- Loyalty, you know what you are paying for
- Peer pressure
- Marketing (Promotional) effort = greater Awareness
( 3 Marks ^^^)
