Y10 Economics - C11 Price Elasticity of Demand

What does Price Elasticity of Demand (PED) measure?

• The change in supply due to price changes

• The cost of production for a product

• The change in demand due to price changes

• The total revenue generated from sales

When is demand considered elastic?

• When demand is perfectly inelastic

• When demand is equal to supply

• When demand changes significantly with price changes

• When demand does not change with price

What happens to demand when the price of a product increases and it is inelastic?

• Demand drops to zero

• Demand remains unchanged

• Demand decreases slightly

• Demand increases significantly

Which of the following is a determinant of PED?

• The color of the product

• The availability of substitutes

• The brand name of the product

• The location of the store

If the PED value is equal to 0, what does this indicate?

• Demand is perfectly elastic

• Demand is highly responsive

• Demand is unitary elastic

• Demand is perfectly inelastic

What is the relationship between PED and total revenue?

• Inelastic demand means no revenue is generated

• Elastic demand can increase revenue if prices are lowered

• Lower PED always leads to higher revenue

• Higher PED always leads to lower revenue

Which of the following products is likely to have inelastic demand?

• Designer clothes

• Smartphones

• Luxury cars

• Bread

What does a PED value greater than 1 indicate?

• Demand is elastic

• Demand is perfectly inelastic

• Demand is inelastic

• Demand is unitary elastic

Which factor can make demand more elastic over time?

• Increased brand loyalty

• Higher costs of switching

• Necessity of the product

• Availability of substitutes

What is an example of price discrimination?

• Offering discounts for bulk purchases

• Increasing prices during peak seasons

• Charging different prices for the same product based on demand

• Setting a fixed price for all customers