IGCSE Economics quiz with Correct resolutions.
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Factors affecting demand Correct Answer Advertisement, income, fashion, price, complements, substitutes. Factors affecting supply Correct Answer Cost of production, technology, natural factors. Infe... rior goods Correct Answer Income rises, demand falls and vice versa. Normal goods Correct Answer Income rises, demand rises and vice versa. PED Formula Correct Answer %change in quantity/%change in price Factors affecting price elasticity of supply Correct Answer Production speed, amount of spare capacity. Limitation of PED Correct Answer Sometimes PED cannot be applied, because firms might be forced to lower/raise their prices due to factors that cannot be controlled. Examples of this include fierce competition, or low capital. Factors affecting price elasticity of demand Correct Answer Substitutes, degree of necessity, percentage income spent on good/service. Basic goods Correct Answer Necessities. Luxury goods Correct Answer Goods people buy when they have money to afford them. Applications of income elasticity for firms. Correct Answer Used to optimize profit. For example a firms may decide to change from glass cups to tables because tables are more income inelastic. [Show More]
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