Electromac produces audio products. The company was founded by music producer and singer Little Al.
The price elasticity of demand for Electromac Headphones is most likely to be low if the headphones.
Select ONE answer
- require a high proportion of a customer’s income
- have a unique and fashionable design
- are very similar to competitors’ headphones
- have low brand loyalty
Show the workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Business Studies KS4 & KS5 classes
The answer is 2
- Not correct – requiring a high proportion of income is likely to result in a high PED rather than a low PED as customers will be more price sensitive.
- Correct – % change in quantity demanded/ % change in price. If Electromac headphones have a unique and fashionable design customers will want to buy them regardless of price. This makes them less price sensitive thus leading to a low PED.
- Not correct – PED would be high rather than low as customers could easily switch to other headphone manufacturers on the market.
- Not correct – this would mean that customers are more willing to try other headphone brands over Electromac and it would have high.
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