How PED effects consumption

Question 1

Define PED

Answer 1

Responsiveness of Qd for a product to a change in its price
PED = % change in QD
________________

        % change in P

Question 2

Explain inelastic diagram

Answer 2

Price and quantity on the axes demand normal supply normal shift in supply to the left, draw Z across from where S1 meets Q2,, label X as bottom right of rectangle, label T where supply to and price to connect

Question 3

Explain elastic diagram

Answer 3

Price on one access quantity on the other axes, more shallow demand curve supply shifts left and label as same as inelastic

Question 4

Where is tax revenue

Answer 4

T, P, Z, X:

Question 5

Where is consumer burden

Answer 5

T, A, P1 and P2

Question 6

Where is the producer burden

Answer 6

P A X Z

Question 7

Explain PED on taxation

Answer 7

Supply shifts left by the amount of tax, Define tax incidence, if more inelastic produces know They can pass on more of the tax to consumers