2.2.1 - 2.2.4

Question 1

Price elasticity of demand

Answer 1

Responsiveness to demand when price of product changes

Question 2

Price inelastic

Answer 2

Price does not change demand

Question 3

PED formula

Answer 3

Change in price (%)

Question 4

Pricing strategy

Answer 4

Amount paid by customer for the good/service

Setting a products price for medium to long term

Question 5

Price skimming

Answer 5

Prices are high to begin with but depreciate over time

Question 6

Cost plus

Answer 6

Product has a percentage added on top for profit

Question 7

Penetration pricing

Answer 7

Low prices to begin with before raising them when enough people buy the product

Question 8

Predatory pricing

Answer 8

Dominant businesses undercut prices to remove competition

Question 9

Competitive pricing

Answer 9

Businesses reduce prices to compete against rivals

Question 10

Psychological pricing

Answer 10

Companies set prices at £9.99 instead of £10 to make it look lower than it is

Question 11

Brand loyalty

Answer 11

The tendency of some consumers to continue buying the same brand of goods rather than those of competing brands

Question 12

Big data

Answer 12

Large amounts of information that a business can use to make informed decisions by using patterns and trends in the data

Question 13

YED formula

Answer 13

%∆in income (Y)

Question 14

Income elasticity of demand

Answer 14

Measures the relationship between a change in quality demand and a change in real income

Question 15

Normal goods

Answer 15

Demand rises as income rises and vice versa

Question 16

Inferior goods

Answer 16

Demand falls as income rises and vice versa

Question 17

Boom

Answer 17

A period of increased commercial activity within a business/market/industry/economy

Question 18

Recession

Answer 18

A period of temporary economic decline during which trade and industrial activity are reduced