price elasticity of demand
What price elasticity of demand means in Business A-Level, as defined for AQA.
Definitions of price elasticity of demand
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Reference: AQA
Measures the percentage change in quantity demanded divided by the percentage change in price, telling the firm whether a premium survives contact with the market.
Any price based method should be tested against this first, so that a price rise is justified only where demand is inelastic or the brand can carry it.
The percentage change in quantity demanded divided by the percentage change in price, used to explain why a quality reputation protects a price rise.
The percentage change in quantity demanded divided by the percentage change in price.
Topics that use price elasticity of demand
- Making financial decisions: improving cash flow and profits (AQA A-Level)
- Making marketing decisions: using the marketing mix (AQA A-Level)
- Making operational decisions to improve performance: improving quality (AQA A-Level)
- Strategic positioning: choosing how to compete (AQA A-Level)
Related terms
- brand
- cash flow versus profit
- channel conflict
- competitive advantage
- constraints on small firms
- continuous improvement
- contribution per unit
- cost leadership
Using price elasticity of demand in the exam
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