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Business_A-level_Cie

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  1. business-and-its-environment

    enterprise
    6 主题
  2. business-structure
    6 主题
  3. size-of-business
    3 主题
  4. business-objectives
    3 主题
  5. stakeholders-in-a-business
    2 主题
  6. external-influences-on-business
    12 主题
  7. business-strategy
    10 主题
  8. human-resource-management
    human-resource-management-hrm
    8 主题
  9. motivation
    4 主题
  10. management
    2 主题
  11. organisational-structure
    5 主题
  12. business-communication
    5 主题
  13. leadership
    2 主题
  14. human-resource-strategy
    3 主题
  15. marketing
    the-nature-of-marketing
    7 主题
  16. market-research
    3 主题
  17. the-marketing-mix
    6 主题
  18. marketing-analysis
    5 主题
  19. marketing-strategy
    3 主题
  20. operations-management
    the-nature-of-operations
    3 主题
  21. inventory-management
    2 主题
  22. capacity-utilisation-and-outsourcing
    1 主题
  23. location-and-scale
    2 主题
  24. quality-management
    1 主题
  25. operations-strategy
    4 主题
  26. finance-and-accounting
    business-finance
    2 主题
  27. sources-of-finance
    3 主题
  28. forecasting-and-managing-cash-flows
    1 主题
  29. costs
    4 主题
  30. budgets
    1 主题
  31. financial-statements
    4 主题
  32. analysing-published-accounts
    6 主题
  33. investment-appraisal
    2 主题
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The concept of 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?

Calculating price elasticity of demand

  • 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

Helsinki Hurricanes sells team shirts for $24. In 2024 it sold 3,240 shirts at this price. Due to increased costs, the team manager has decided to increase the price to $30 per shirt from 2025. She expects demand to fall by 12%.

Calculate the price elasticity of demand for Helsinki Hurricanes team shirts.

(2)

Step 1: Calculate the percentage change in price

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