price elasticity of demand

Question 1

define PEOD

Answer 1

the responsiveness of demand to a change in price

Question 2

what is price inelastic demand

Answer 2

a change in price results in a proportionally smaller change in demand ( less than one)

Question 3

what is price elastic demand

Answer 3

a change in price results in a greater change in demand (greater than one)

Question 4

how is PEOD calculated

Answer 4

percentage change in quantity demanded/percentage change in price

Question 5

how does time influence PEOD

Answer 5

PED tends to fall in the long term e.g fuel for cars

Question 6

how does competition influence PEOD

Answer 6

very competitive markets mean a higher PED

Question 7

how does branding influence PEOD

Answer 7

stronger brands mean consumers are less willing to go substitute goods

Question 8

how does the proportion of income spent on a product affect PEOD

Answer 8

cheap products e.g matches are unlikely to have high PED as the amount spent on them is trivial