H2 PED FLASHCARD

Front

Price elasticity of demand measures

Back

The responsiveness of demand to a change in price

Front

Identify degrees of price elasticity of demand: 1 < PED < ∞, 0 < PED < ∞, PED = 1, PED = ∞

Back

1 < PED < ∞

Front

Which of the following is a factor affecting PED? Consumer preferences, Government regulations on pricing, Number of competitors in the market, Proportion of income spent on the good

Back

Proportion of income spent on the good

Front

If a good takes up a large percentage of one’s income, the PED for that good is likely to be

Back

greater than one but less than infinity

Front

If a good has many close substitutes, the PED value for that good is likely to be

Back

greater than one

Front

What happens to total revenue if the price elasticity of demand is less than 1 and the price increases?

Back

Total revenue increases

Front

A firm can increase its revenue by raising its price if the good produced is a necessity.

Back

The good produced is a necessity.

Front

If a manager lowered the prices of his/her products, which type of product would be more likely to increase revenue? (Elastic, Inelastic)

Back

Elastic