Lesson 29

Question 1

PED stands for …

Answer 1

price elasticity demand

Question 2

Elasticity

Answer 2

sensitive of one factor to a change in another

Question 3

PED equation

Answer 3

%change in Q.D. / %change in £

Question 4

Elastic

Answer 4

highly responsive

(e.g. greater than 1)

Question 5

Inelastic

Answer 5

low responsiveness

(e.g. less than 1 )

Question 6

PED practice question

If the price of butter increased by 5% and caused demand to fall by 15%

Answer 6

-15/ 5

= -3

Question 7

What are PED answers always?

Answer 7

Negative

Question 8

PED practice question

If the price of a phone decreased by 10% and caused demand to increase by 30%.

Answer 8

30 / -10

= -3

Question 9

How to calculate change?

Answer 9

difference / original x 100

Answer is a %

Question 10

PED AND calculating change question

The price of a bike falls from £100 to £75 resulting in an increase in quantity demanded from 85 to 95 units.

Answer 10

Change in QD = (10/85) x 100 = 11.8%

Change in E (elasticity) = (-25/100) x 100 = -25%

PED = 11.8 / -25 = 0.5%

Question 11

Value of 0 means…

Answer 11

no relationship between price and quantity demanded

Question 12

Value of 1 means …

Answer 12

unit elastic - proportional

Question 13

High elasticity means …

Answer 13

A small change in price leads to a large change in Q.D.

Question 14

Low elasticity means …

Answer 14

A small change in price leads to a small change in Q.D.