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Business_A-level_Edexcel

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  1. 1-marketing-and-people

    1-1-meeting-customer-needs
    3 主题
  2. 1-2-market
    5 主题
  3. 1-3-marketing-mix-and-strategy
    5 主题
  4. 1-4-managing-people
    5 主题
  5. 1-5-entrepreneurs-and-leaders
    6 主题
  6. 2-managing-business-activities
    2-1-raising-finance
    4 主题
  7. 2-2-financial-planning
    4 主题
  8. 2-3-managing-finance
    3 主题
  9. 2-4-resource-management
    4 主题
  10. 2-5-external-influences
    3 主题
  11. 3-business-decisions-and-strategy
    3-1-business-objectives-and-strategy
    4 主题
  12. 3-2-business-growth
    4 主题
  13. 3-3-decision-making-techniques
    4 主题
  14. 3-4-influences-on-business-decisions
    4 主题
  15. 3-5-assessing-competitiveness
    3 主题
  16. 3-6-managing-change
    3 主题
  17. 4-global-business
    4-1-globalisation
    5 主题
  18. 4-2-global-markets-and-business-expansion
    5 主题
  19. 4-3-global-marketing
    3 主题
  20. 4-4-global-industries-and-multinational-corporations
    3 主题
  21. 5-exam-technique
    5-1-the-exam-papers
    4 主题
  22. 5-2-business-studies-skills
    1 主题
  23. 5-3-structuring-your-responses
    5 主题
  24. 6-pre-release-preparation
    2025-pre-release-music-industry
    9 主题
  1. Business_A-level_Edexcel
  2. 1-2-market
  3. 1-2-4-price-elasticity-of-demand-ped
课 2, 主题 4
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1-2-4-price-elasticity-of-demand-ped

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An introduction to price elasticity of demand

  • When there is an increase in price, there will be a fall in the quantity demanded (QD), and when there is a fall in price, there will be an increase in the QD

  • The question businesses are interested in is “By how much will the QD change?“

  • The price elasticity of demand (PED) helps us to calculate how responsive the change in QD will be to a change in price

    • The responsiveness is different for different types of products

Calculation of PED

  • The PED value is always negative

  • PED can be calculated using the following formula:

text PED = end text fraction numerator percent sign space change space in space quantity space demanded over denominator percent sign space change space in space price end fraction space equals space fraction numerator percent sign triangle space in thin space QD over denominator percent sign triangle in space straight P end fraction 

  • To calculate a % change, use the following formula:

percent sign space Change space equals space fraction numerator new space value space minus space old space value over denominator old space value end fraction space cross times space 100 

Worked Example

The PED for popcorn at the cinema is –0.8. The current price of a box of popcorn is £5. Using the data, calculate the percentage change in QD following a £1 increase in the price of a box of popcorn. You are advised to show your work.

[4]

Step 1: State the PED formula:

text PED end text space equals space fraction numerator percent sign space change space in thin space demand over denominator percent sign space change space in space price end fraction [1]

Step 2: Calculate the percentage change in price:

<img alt=”equals space fraction numerator £ 6 space minus space £ 5 over denominator £ 5 end fraction space cross times space 100 space equals space 20 percent sign space” data-mathml=”<math ><semantics><mrow><mo>=</mo><mo>&#160;</mo><mfrac><mrow><mo>&#163;</mo><mn>6</mn><mo>&#160;</mo><mo>-</mo><mo>&#160;</mo><mo>&#163;</mo><mn>5</mn></mrow><mrow><mo>&#163;</mo><mn>5</mn></mrow></mfrac><mo>&#160;</mo><mo>&#215;</mo><mo>&#160;</mo><mn>100</mn><mo>&#160;</mo><mspace linebreak=”newline”/><mspace linebreak=”newline”/><mo>=</mo><mo>&#160;</mo><mn>20</mn><mo>%</mo><mo>&#160;</mo></mrow><annotation encoding=”application/vnd.wiris.mtweb-params+json”>{“fontFamil

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