Price elasticity of demand

Price elasticity of demand measures

• The responsiveness of price to a change in demand

• The responsiveness of demand to a change in income

• The responsiveness of demand to a change in price

• The responsiveness of demand to a change in supply

Inelastic demand curves are illustrated as

• Flat

• Horizontal

• Positively sloped

• Steep

Goods with elastic demand are likely to

• Have lots of close substitutes

• Be addictive in nature

• Take up a small proportion of a consumer's regular spending

• Have a high degree of customer loyalty

Dame Allan's is about to raise school fees by 10% The most elastic demand response is likely to come from the parents of pupils going into

• Year 7

• Year 10

• Year 11

• Year 13

A 20% price rise is likely to cause demand to fall by only 1% for

• New cars

• First class flights

• Apples

• Shoe laces

Price elastic demand curves are

• Normal, positive and flat

• Normal, negative and flat

• Exceptional, negative and flat

• Normal, negative and steep

A business that is about to have a sale will hope that consumer demand is

• Exceptional

• Normal

• Price elastic

• Price inelastic

A firm can increase its revenue by raising its price if

• Demand is price inelastic

• Demand is price elastic

• There are a large number of close substitutes

• The degree of brand loyalty is low

The demand for petrol is likely to become more price elastic

• If electric cars become more expensive

• As electric cars become cheaper

• As consumers become more aware of climate threats

• If public transport becomes more reliable

How could a business try to find out its own price elasticity of demand?

• Carry out surveys for customer satisfaction

• Change workers wage rates and record the effect on productivity

• Increase advertising spending on its products

• Change prices regularly and record the effect on sales levels