Price Elasticity of Demand (Edexcel A-Level Business): Flashcards

Responsiveness of quantity demanded to price changes

(% change in quantity demanded) / (% change in price)

Less than 1 (e.g. 0.5, 0.3, 0.8)

Greater than 1 (e.g. 1.5, 2.0, 3.5)

More substitutes make demand more elastic

Elasticity increases over longer time periods

Strong branding reduces elasticity

TR = P × Q (price multiplied by quantity)

Total revenue rises

Total revenue rises