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PED AND PES questions and answers already passed 2024
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PED AND PES questions and answers already passed 2024
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PED AND PESPED Definition and Formula - correct answer ✔The responsiveness of the
quantity demanded following a change in price.
PED = % Change in QD/ % Change in Price
Price Elastic Demand - correct answer ✔PED > 1
The percentage change in QD is greater than the percentage change in price.
Eg. Luxury cars
Price Inelastic Demand - correct answer ✔PED < 1
The percentage change in QD is smaller than the percentage change in price.
Eg. Gasoline
Perfectly Elastic, Perfectly Inelastic, Unit Elastic - correct answer ✔Perfectly
Elastic: PED = Infinity
Perfectly Inelastic: PED = 0
Unit Elastic: PED = 1
Determinants of PED - correct answer ✔1. Number of close substitutes
2. Proportion of income spent on the good
3. Degree of necessity
4. Time
Application of PED - correct answer ✔1. Total Revenue (Inelastic or Elastic
part of curve)
Elastic = Increase in price - Decrease in revenue
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