The responsiveness of demand after a change in price
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Define YED
The responsiveness of demand after a change in income
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Define AED
The responsiveness of demand after a change in advertising
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How do you work out PED?
The percentage change in demand / The percentage change in price
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What does it mean if PED is >1?
Elastic
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What 4 factors does PED depend on?
Substitues, luxury/necessity, % income spent, time after price change
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What does it mean if YED is a minus number?
inferior product
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What does it mean if YED is between 0 - 1
normal product
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What does it mean if YED is more than 1?
luxury product
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How do you work out YED?
The percentage change in demand / The percentage change in income
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How do you work out AED?
The percentage change in demand / The percentage change in advertising
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Give 2 advantages of AED
Helps make decisions, shows efficiency of promotion
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Give 3 limitations of AED
If there are multiple methods used how can you tell which one's more effective? May not have the same effect if repeated, the effects of the advertising may be short lived
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How do you work out a % change?
Change / orginal x 100
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Other cards in this set
Card 2
Front
Define YED
Back
The responsiveness of demand after a change in income
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