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Price elasticity of Demand

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Price elasticity of Demand

  • This topic has 5 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 15, 2016 at 6:40 am #348991
    Huma
    Member
    • Topics: 4
    • Replies: 9
    • ☆

    Hello Sir
    kindly help me answer this because the answer that’s in the revision kit is given but i think there’s a mistake

    The following statements have been made about the price elasticity of demand for a product.
    (1) Price elasticity of demand may be reduced by means of advertising and sales promotion activities.
    (2) When elasticity of demand is very inelastic customers are not sensitive to either price or advertising
    and sales promotion activities.
    Which of the above statements is/are true?
    A 1 only
    B 2 only
    C Neither 1 nor 2
    D Both 1 and 2

    November 15, 2016 at 8:27 am #349029
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54675
    • ☆☆☆☆☆

    Neither statement is true.

    Price elasticity only measure the effect of changes in price on the demand (not the affect of advertising).

    November 15, 2016 at 9:23 am #349045
    Huma
    Member
    • Topics: 4
    • Replies: 9
    • ☆

    A

    Advertising and sales promotion may persuade customers to pay more for a product, and so may
    make demand more inelastic in response to price changes. When demand is very inelastic with
    regard to the sales price, elasticity may be increased to some extent by means of advertising and
    sales promotion.

    This is the answer from the revision kit. while thought the answer was supposed to be B

    November 15, 2016 at 5:29 pm #349109
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54675
    • ☆☆☆☆☆

    If you already knew the answer then why did you not say so!!!

    I have already explained why I think the correct answer is C

    November 16, 2016 at 5:36 am #349194
    Huma
    Member
    • Topics: 4
    • Replies: 9
    • ☆

    Because I thought there’s a Mistake in the text book as i mentioned that ” the answer that’s in the revision kit is given but i think there’s a mistake”. I thought the answer was supposed to be B while in the kit it was A.
    Thank you

    November 16, 2016 at 5:58 am #349203
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54675
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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