1.2.4 PED

Question 1

what is PED

Answer 1

Measures the responsiveness of quantity demanded to a change in price at a specific time

Question 2

equation for PED

Answer 2

percentage change in quantity demanded / percentage change in price of demand

Question 3

how to calculate percentage change

Answer 3

(new - old / old ) x 100

Question 4

answer greater than 1

Answer 4

elastic goods

luxury items and branded goods

Question 5

define elastic demand

Answer 5

consumers are highly responsive to price changes

Question 6

answer less than one

Answer 6

inelastic good

petrol, necessities

Question 7

what is inelastic demand

Answer 7

consumers are not very responsive to price changes

Question 8

answer is 1

Answer 8

unitary elasticity (cancelled out)

Question 9

how to reduce PED

Answer 9

loyalty schemes
become addictive
necessity
increase convenience
USP

Question 10

why calculate PED

Answer 10

1) set correct price
2) see how volatile / loyal customers are

Question 11

if a good is price elastic what will the business do to the price

Answer 11

set low and competitive prices to increase revenue

Question 12

if a good is price inelastic what will the business do to the price

Answer 12

use high prices and price skimming to increase revenue