chapter 6 - using price elasticity of demand

Question 1

price elasticity of demand

Answer 1

measure of how sensitive demand is to a change in price

Question 2

goods are more price elastic if…

Answer 2

1. goods with close substitutes
2. ‘wants’
3. timescales to make a decision

Question 3

on a price elasticity demand graph what can a small percentage change in price result in

Answer 3

a GREATER than proportional percentage change in quantity demanded

Question 4

goods are more price inelastic if….

Answer 4

1. no close alternatives
   2.’ needs’
2. short decision periods

Question 5

on a price inelasticity demand graph a percentage change in price results in a what?

Answer 5

in a LESS THAN proportional drop in percentage change in quantity demanded

Question 6

3 ways a brand can protect themselves

Answer 6

1. copyright - products files…
2. patents - protects product ideas
3. trademarking - protects logos

Question 7

price elasticity of demand equation

Answer 7

percentage change in quantity demanded ÷ percentage change in price

Question 8

understanding the answer - ELASTIC

Answer 8

any price change causes a larger change in demand
value of -1 or lower

Question 9

understanding the answer - UNITARY ELASTIC

Answer 9

demand changes by the same percentage as the price
value of -1

Question 10

understanding the answer - INELASTIC

Answer 10

demand changes by a smaller percentage than price
value between 0 and -1