Price Elasticity Of Demand (PED) 1.2.4 Flashcards
1
Q
What is elasticity?
A
Elasticity measures the responsiveness of demand to a change in a relevant variable – such as price or income
2
Q
Definition of price elasticity of demand (PED)
A
Measures the extent to which the quantity of a product demanded changes in response to a change in price eg. Cadbury chocolate
3
Q
Formula of PED
A
% change in quantity demanded/ % change in price
4
Q
What is the value of PED?
A
> 1 more than 1
Change in demand is more than the change in price
5
Q
Factors influencing PED
A
• The availability of substitutes • Income • Frequency of purchase • Branding • Time • Nature of the good
6
Q
How do you calculate percentage change?
A
(new figure - old figure/ old figure) x 100
7
Q
What does a PED curve show?
A
Shows a much larger change in demand when prices change 
8
Q
Value of unitary price elasticity?
A
Exactly 1/ =1
Change in demand= change in price
