chapter 4

Question 1

price elasticity of demand

Answer 1

the degree of responsiveness of demand for a commodity with reference to change in the price of such commodity.

Question 2

percentage method formula for PED

Answer 2

percentage change in quantity demanded/ percentage change in price

Question 3

proportion formula of PED

Answer 3

change in quantity/ change in price * price/quantity

Question 4

facts affecting price elasticity of demand

Answer 4

1. nature of commodity
2. availability of substitutes
3. habits
4. income level

Question 5

degrees of elasticites of demand

Answer 5

1. perfectly elastic demand
2. perfectly inelastic demand
3. highly elastic demand
4. less elastic demand
5. unitary elastic demand