1.2.4 PED

Question 1

equation of PED (Q before you P)

Answer 1

%change in quantity demanded % change in price

Question 2

what happens when price goes up

Answer 2

quantity demanded goes down

Question 3

is PED a %

Answer 3

no PED is always a number

Question 4

what range is elastic and what is inelastic

Answer 4

anything between -1 and 1 is inelastic

anthing <-1 is elastic
anything >1 is elastic

Question 5

what does it mean if PED is inelastic

Answer 5

demand is unresponsive to a change in price

Question 6

what does it mean if PED is elastic

Answer 6

D is responsive to a change in price

Question 7

why do some goods have elastic or inelastic demand? (6)

Answer 7

necessity/ luxury

number and closeness of substitutes

addictiveness

brand loyalty

time period

proportion of income taken up by the product (if a£1 good increases by 10% it’s only 10p but if a £1000 good increases by 10% it’s £100 and that is much more)

Question 8

what happens when you raise price of elastic and inelastic goods

Answer 8

inelastic goods raising price will raise total revenue

elastic goods raising price will lower total revenue