Criterion No

Criteria

1.1

Compare and contrast the needs of stakeholders and shareholders.

2.1

Identify the factors that determine demand and analyse the effects of changes to

these factors upon the demand for a product or service

2.2

Identify the factors that determine supply and analyse the effects of changes to

these factors upon the supply of a product or service.

3.1

Explain, with examples, the difference between elastic and inelastic demand.

3.2

Explain the relationship between elasticity and revenue and how elasticity may vary

along the length of a demand curve

3.3

Effectively apply the theory of elasticity to a specified problem

QUESTION:

Topshop is what we call a strong brand.It is famous for its 'highfashion'styles, wide celebrity interest and... very nice dresses.Here is a 'model' table of the demand quantity and price of this current and popular Topshop shiftdress:

Popular Topshop shift dress:

Price Quantity of Demand

46 1,000

66 800

80 500

The first row translates to 'When the price of this dress is 46, 1,000 people will purchase it.

a.If the current price of this dress is 46, calculate the price elasticity if it went up to 66 in the weeks before Christmas. Is this dress elastic or inelastic?

b.Explain the factors that may cause the Demand for a product to be Price Elastic or Inelastic.