PED - GCSE Economics

What does PED stand for?

• Product Elasticity Demand

• Product Elastic Demand

• Price Elasticity of Demand

• Price Elasticity of Delivery

If the price of an item increases by 10% and the demand falls by 20%, what is the PED?

• 1.0

• -2.0

• -1.0

• 2.0

What is the PED if the price of petrol increased from 130p to 140p and demand fell from 10,000 units to 9,900?

• 0.13

• 1.3

• -1.3

• -0.13

What characteristic do luxury goods, like sports cars, have in terms of price elasticity?

• Price Inelastic

• Price Elastic

• Perfectly Inelastic

• Unit Elastic

Goods with many substitutes are likely to be:

• Perfectly Elastic

• Price Elastic

• Price Inelastic

• Perfectly Inelastic

If a good is necessary and has few substitutes, its demand is likely to be:

• Price Inelastic

• Unit Elastic

• Price Elastic

• Perfectly Elastic

What happens to revenue if demand is inelastic and the price increases?

• Decreases

• Stays the same

• Becomes negative

• Increases

What strategy might firms use if demand is elastic to increase revenue?

• Reduce the number of substitutes

• Decrease the price

• Increase the price

• Advertising to increase brand loyalty

What is price discrimination?

• Charging different prices based on the cost of production

• Charging the same price to all customers

• Illegal pricing strategy

• Charging different prices based on demand elasticity

Who bears a higher tax burden when demand is price inelastic?

• No one

• Firms

• Consumers

• Government