Price Elasticity of Demand

Price Elasticity of Demand is calculated as the percentage change in quantity demanded divided by the percentage change in (a)   .

• Supply

• Price
• Income

• Cost

Explain the characteristics of mass markets.

• They have a narrow customer base

• They focus on niche products

• They have a wide customer base and standardized products

• They are limited to local areas.

Added value refers to (a)   .

• The cost of production

• The selling price

• The increase in worth of a product

• The decrease in worth of a product

Seasonality affects demand by (a)   .

• Keeping it constant

• Fluctuating based on time of year
• Increasing production costs

• Decreasing product quality

The price elasticity of demand is considered elastic if the value is greater than (a)   .

• 0

• 1
• -1

• 10

What is the likely impact on demand if the price of a Big Mac increases to £10?

• Increase

• Decrease

• No change

• Cannot be determined

What happens to customer demand when prices go up?

• Demand increases

• Demand decreases

• Demand stays the same

• Demand fluctuates.

When business costs rise, companies try to (a)   the costs so that customers do not have to pay more.

• Transfer

• Absorb

• Ignore

• Increase

What might customers do if the price of a product increases significantly?

• Buy more

• Look for substitutes

• Ignore the price change

• Complain

Businesses try to avoid putting prices up because it affects (a)   .

• Supply

• Demand
• Production

• Quality