Price elasticity of demand

Elasticity measures...

• The extent of a change in demand

• The extent of a change in price

• The quantity demanded

• The % of income a good consumes

Price elasticity of demand measures​...

• The responsiveness of quantity demanded given a change in price

• The responsiveness of price given a change in demand

• The responsiveness of quantity demanded given in a change in population size

• The quantity demanded at any given price level

The formula for price elasticity of demand is...

• % change in Qd / % change in Price

• % change in Price / % change in Qd

• Change in quantity / Change in price

• % change in price / % change in income

A PED value greater than 1 means...

• The good is price elastic

• The good is price inelastic

• The good is unitary elastic

• The good is perfectly price elastic

A PED value less than 1 means...

• The change in demand is less than the change in price​

• The change in demand is more than the change in price​

• A change in price doesn’t cause a change in demand at all​

• A change in price leads to a proportionate change in demand​

A change in price doesn’t cause a change in demand at all​

What is the PED value?

• 0

• 1

• >1

• <1

A PED value of -1.2​ means...

• The change in demand is more than the change in price​

• The change in demand is less than the change in price​

• A change in price leads to a proportionate change in demand​

• A change in price causes a complete stop to demand​

Price for a bottle of water increases by 20%. As a result there is a fall in demand of 5%. Calculate the PED.

(a)  

Price of a chocolate bar decreases by 4%. As a result there is an increase in demand of 12%. Calculate the PED.

(a)  

Price of a can of beans increases from 50p to 55p. As a result there is a decrease in demand of 25%. The PED is...

• -2.5 and the product is therefore price elastic

• -2.5 and the product is therefore price inelastic

• -0.4 and the product is therefore price elastic

• -2 and the product is therefore price elastic