Price Elasticity Of Demand

Question 1

What is the formula for price elasticity of demand?

Answer 1

Price elasticity of demand

=

% change in quantity demanded
/
% change in price

Question 2

What is a patent?

Answer 2

A patent protects new inventions and covers how things work, what they do, how they do it, what they are made of and how they are made.

Question 3

What is a trademark?

Answer 3

A trademark is a sign which can distinguish the goods and services of a business from those of its competitors.

Question 4

What is price elasticity of demand definition?

Answer 4

The price elasticity of demand measures how responsive demand is to changes in the price, all other factors constant.

Question 5

What is income elasticity of demand definition?

Answer 5

The income elasticity of demand measures the sensitivity or responsiveness of the quantity demanded of a product to a change in its price.

Question 6

When is a product considered price elastic?

Answer 6

If demand reacts strongly to a small change in price then the product can be referred to as price elastic.

Question 7

When is a product considered price inelastic?

Answer 7

If demand is insensitive to a change in price then the product can be referred to as price inelastic

Question 8

What are the influences on price elasticity?
What makes a product more sensitive to a price change?

Answer 8

• High degree of competition or substitutes

• A lack of differentiation

• Lack of brand loyalty

Question 9

What is the value for a price inelastic product?

Answer 9

-1 < 0

Anything in between 0 and -1

Question 10

What is the value for a price elastic product?

Answer 10

-1 > x

Anything less than -1

Question 11

Why do firms want their products to be price inelastic?

Answer 11

Inelastic products allow them to have some flexibility to pass cost increases on to consumers without a large effect on revenue.