igcse econ how the market works

4 factors affecting PED

1. availabitity of substitutes. 2. Necessity vs luxury. 3. Proportion of income spent. 4. time period to respond

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5 cases of PED

inelastic, elastic,perfectly elastic, perfectly inelastic, unit elastic

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equation for total revenue

price times quantity

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If firms have an elastic PED how can they still drive up prices

1. takeover competition, 2. drive it out of business, predatory prices, 3. Make product unique by branding and advertising

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Describe PED

measures the proportionate responsiveness of demand to a change in price. elastic has a value greater than 1, inelastic less than 1

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what is equilibrium price 3

demand =supply, stable market, no excess in demand or supply

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4 factors affecting demand

1. price of substitutes 2. price of compliments 3. marketing 4. interest rates

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5 cases of PED

inelastic, elastic,perfectly elastic, perfectly inelastic, unit elastic

equation for total revenue

If firms have an elastic PED how can they still drive up prices

Describe PED

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