PED+TEST

PED Test Answer all questions on a separate sheet of paper.

1. Define PED (2) 2. Give the formula for PED (2) 3. Why are all values negative (2) 4. What does it mean when a good has a PED = -1.5. (2) 5. What does it mean when a good has a PED of 0.5 (2) 6. List the 4 main determinants of PED (4) 7. Which would be more elastic? Demand for cars or demand for oil? Explain your answer. (4) 8. If Demand was price elastic what would you do to the price? Explain your answer. (4) 9. Why might a firm wish to make demand for its product price inelastic ? (4) How could it attempt to do this? (4)