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  1. 1-1-the-nature-and-purpose-of-business
    3 主题
  2. 1-2-forms-of-business
    5 主题
  3. 1-3-the-external-environment
    5 主题
  4. 2-1-management-and-leadership
    3 主题
  5. 2-2-management-decision-making
    4 主题
  6. 2-3-the-role-and-importance-of-stakeholders
    3 主题
  7. 3-1-marketing-objectives
    1 主题
  8. 3-2-understanding-markets-and-customers
    5 主题
  9. 3-3-making-marketing-decisions
    2 主题
  10. 3-4-the-marketing-mix
    7 主题
  11. 4-1-operational-objectives
    2 主题
  12. 4-2-operational-performance
    1 主题
  13. 4-3-efficiency-and-productivity
    3 主题
  14. 4-4-quality
    1 主题
  15. 4-5-inventory-and-supply-chain-management
    3 主题
  16. 5-1-financial-objectives
    2 主题
  17. 5-2-financial-performance
    6 主题
  18. 5-3-sources-of-finance
    3 主题
  19. 5-4-cash-flow-and-profit
    1 主题
  20. 6-1-human-resource-objectives
    1 主题
  21. 6-2-human-resource-performance
    1 主题
  22. 6-3-organisational-design
    3 主题
  23. 6-4-human-resource-planning
    4 主题
  24. 6-5-motivation
    4 主题
  25. 6-6-improving-employer-employee-relations
    2 主题
  26. 7-1-mission-objectives-and-strategy
    4 主题
  27. 7-2-assessing-the-internal-position-of-a-business
    10 主题
  28. 7-3-changes-in-the-external-environment
    7 主题
  29. 7-4-the-competitive-environment
    1 主题
  30. 7-5-investment-appraisal
    2 主题
  31. 8-1-strategic-direction
    1 主题
  32. 8-2-strategic-positioning
    2 主题
  33. 9-1-changes-in-scale
    4 主题
  34. 9-2-innovation
    2 主题
  35. 9-3-globalisation-and-internationalisation
    4 主题
  36. 9-4-digital-technology
    1 主题
  37. 10-1-managing-change
    3 主题
  38. 10-2-organisational-culture
    2 主题
  39. 10-3-implementing-strategy
    2 主题
  40. 10-4-strategic-failure
    2 主题
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Price elasticity of demand

  • Price elasticity of demand (PED) measures how responsive demand for a product is to a change in price

    • In general,

      • when the price for a product increases, demand falls

      • when the price for a product decreases, demand rises

    • PED answers the question: By how much will demand change?

Calculation of PED

  • PED will always be a negative value due to the inverse relationship between price and quantity

    • If the price goes up, the quantity demanded goes down

    • If the price goes down, the quantity demanded goes up

  • PED can be calculated using the 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 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 price elasticity of demand 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 quantity demanded following a £1 increase in the price of a box of popcorn. You are advised to show your work.

[4]

Answer:

Step 1: State the PED formula

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