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