Ped

Question 1

What does PED measure?

Answer 1

PED Measures the responsiveness of percentage change in quantity demanded to the percentage change in price.

Question 2

When is PED elastic?

Answer 2

PED is elastic when it’s between -1 and negative infinity.

Question 7

Factors influencing PED?

Answer 7

Necessity and Luxury,
Addiction and Habit,
Availability of a substitute, Brand Loyalty,
Proportion of Income,
Time. (NASBIT)

Question 8

What do you think it means if a good is a necessity?

Answer 8

It means that we need it to live our lives for example: water, food and petrol (Inelastic).

Question 9

What do you think it means if a good is a luxury?

Answer 9

It means that the good is not needed, but is nice to have if a consumer can afford it (Elastic).

Question 10

What do you think the word substitute means in economics?

Answer 10

A substitute is a product which can replace another product e.g. a Samsung and an iPhone.

Question 11

What type of elasticity would there be if a firm has strong brand loyalty?

Answer 11

Inelastic

Question 12

What type of elasticity would there be if a firm has weak brand loyalty?

Answer 12

Elastic

Question 13

Time on PED (Short-Run)

Answer 13

In the short-run demand is price inelastic as there’s not enough time to search for substitutes. For example, if the train increases price by £2 you will still have to use it to go to school/work .

Question 14

Time on PED (Long-Run)

Answer 14

In the long-run demand is price elastic as the consumer has had time to search for other substitutes. For example, if the train increased the price of a ticket by £2 last month- the consumer would of had time to switch to different means of transport e.g. bus.