Price Elasticity of Demand

Question 1

What is a PED?

Answer 1

The responsivness of demand to changes in prices

Question 2

What is inelastic demand?

Answer 2

change in price results in a proportionally smaller change in the quantity demanded

Question 3

What is elastic demand?

Answer 3

changes in price that results in a greater change in the quantity demanded

Question 4

How do you calculate PED?

Answer 4

Precentage change in quantity demanded/ precentage change in price

Question 5

What does a PED value of 0 represent?

Answer 5

A perfectly inelastic good

Question 6

What does a PED value of infinity represent?

Answer 6

A perfectly elastic good

Question 7

What does a PED of -1 represent?

Answer 7

Unitary elasticity

Question 8

What are the factors influencing PEDs?

Answer 8

-Availibility of substitutes
-Degree of neccesity
-Proportion of income spent on a product
-Time

Question 9

What is the PED of products that are under indirect taxes?

Answer 9

Very inelastic

Question 10

What is the PED of products that are subsidised?

Answer 10

Inelastic

Question 11

What are the factors influencing PED?

Answer 11

Time
Income
Neccessity
Substitute goods