Price elasticity of demand (PED)

The price elasticity of demand for a product is perfectly inelastic. What would happen to total revenue if the product’s price were reduced by $25\%$?

Feb/March 2016

The price elasticity of demand for a product is greater than one. What will happen to total revenue if the product’s price is cut by $3\%$?

Feb/March 2017

The table gives the quantity of chocolates demanded at two different prices. What is the price elasticity of demand when the price drops from $\$0.50$ to $\$0.45$?

Feb/March 2018

In 2018, the Netherlands had 1.3 bicycles per person, and the capital city built the world’s largest underground bicycle parking area. City centres, where most cycling takes place, have very little land available. Demand for bikes in the Netherlands is price-inelastic. Only a small number of people in the Netherlands take out loans to buy bikes. The government supports cycling by spending on both bike parking areas and leisure cycle parks.

Feb/March 2021

A government imposes an indirect tax on a good that has price-elastic demand. What will be the outcome?

Feb/March 2023

The price elasticity of demand for cigarettes is estimated at $0.5$. The government puts in place a tax on cigarettes in order to lower consumption. By what percentage must the price of cigarettes increase to cut consumption by $10\%$?

Feb/March 2023

A business is considering raising the price of its product to twice the current level. Which price elasticity of demand (PED) for the product would lead to the largest increase in revenue?

Feb/March 2024

In 2021, one of the world’s largest container ships blocked the Suez Canal. As a result, some firms saw profits fall and a shortage developed for several products. Delivery of luxury chocolate and salt, for instance, was delayed. These two goods differ in their price elasticity of demand. The interruption to international trade created particular problems for countries that import most of the food they eat.

Feb/March 2024

The price elasticity of demand for smartphones is believed to be $-2.0$. A manufacturer decides to reduce prices by $10\%$. What will be the impact of this price change?

Feb/March 2025

Over the last few years, demand for cars in Indonesia has become less price elastic, whereas the supply of cars has become more price elastic. Which pair of events could have led to these changes?

May/June 2015

The 2014 crop of Arabica beans, which are used to make coffee, was cut by a drought in Brazil in early 2014. Lower output pushed the price of coffee upwards. That higher price affected the quantity of coffee demanded and the demand for its substitutes and complements. Demand for coffee is usually price-inelastic. Any change in the quantity and quality of coffee exports abroad affects Brazil’s current account in the country’s balance of payments.

May/June 2016

A football club increases every stadium seat price by 5%. The stadium is split into four zones. Seat demand decreases by 1% in zone W, by 3% in zone X, by 5% in zone Y and by 6% in zone Z. In which zone is the demand for seats responsive enough to the price change to be elastic?

May/June 2017

The table compares four people’s demand for t-shirts at two prices. Which person has the most elastic demand for t-shirts when the price increases from $\$10$ to $\$15$?

May/June 2017

A mobile (cell) phone provider raises the charge for calls made on its network. Following the price increase, the operator’s revenue decreases by $10\%$. What is the price elasticity of demand (PED) for the service offered by the mobile operator?

May/June 2019

A product has a price elasticity of demand of $-0.5$. How does the demand for a product change if its price decreases from $1 to $0.80?

May/June 2019

Gas demand in a country becomes price inelastic. What happens as a result?

May/June 2019

Several book publishers are active in Pakistan, and this group includes multinational companies (MNCs). They employ a wide variety of specialist staff. Some of these specialists calculate the price elasticity of demand (PED) for their firms’ books. There is debate over whether the government ought to subsidise certain books.

May/June 2019

For sugar in most countries, the price elasticity of demand (PED) is below 1. In 2017, sugar prices declined. Even so, specialised, higher-quality sugar grown in countries such as Mauritius saw a smaller fall than the average world price. Efficient producers, including some farmers in Brazil with low fixed production costs, were also less exposed to the price drop.

May/June 2019

A tailor has four customers for her suit range. The table gives the annual demand for the suits she produces. Which price should be set to maximise the tailor’s annual revenue?

May/June 2021

In the diagram, which demand curve shows perfectly elastic demand?

May/June 2022

A cinema contains 500 seats. Its admission price was increased from $\$2$ to $\$5$, and its daily revenue rose from $\$800$ to $\$1500$. What conclusion may be drawn from this information?

May/June 2022

A government chooses to raise the indirect tax on petrol. Petrol has a price elasticity of demand that is inelastic. What outcomes are likely to follow?

May/June 2022

Which statement concerning price elasticity of demand (PED) is correct?

May/June 2022

A government has imposed a tax on an essential good. Producers have transferred a large share of this tax to consumers by charging higher prices. Which row is correct?

May/June 2023

What is the most probable reason for a product to have a price elasticity of demand above one?

May/June 2023

Which price elasticity of demand (PED) would lead to an increase in total revenue if the price of the good rose?

May/June 2023

A business alters the price of its product and discovers that its revenue rises. Which pair of price change and price elasticity of demand would explain this?

May/June 2024

A blast in a major oil pipeline makes the world price of a barrel of oil rise from $50 to $100. Prior to the blast, world demand for oil was 100 million barrels per day. The world price elasticity of demand for oil is $-0.2$. What is the new worldwide demand for oil (barrels per day) following the blast?

May/June 2024

Read the source material carefully before you answer Question 1. Source material: What might lie ahead for Nicaragua? Nicaragua is Central America’s largest country. It has a substantial agricultural sector, and coffee is one of its main exports. It has been estimated that if the price of coffee changes by 10%, the quantity of coffee demanded changes by 3%. The country’s agricultural output, including coffee, is frequently affected by natural disasters such as droughts and earthquakes. Nicaragua has the lowest Gross Domestic Product (GDP) per head in Central America. Pay is especially low in rural areas of the country. Income inequality is high, and firms usually make lower profits than those in other Central American countries. The number of Nicaraguans who were willing and able to work but could not find a job increased, as measured by both the claimant count and the labour force survey, in 2020. In 2020, the purchasing power of Nicaraguan consumers fell because prices rose by more than incomes. Even so, the country’s currency, the cordoba, remained generally acceptable. It continued to function as a medium of exchange and a store of value. Nicaragua’s future economic performance will be shaped by several factors. These include the proportion of the labour force employed in agriculture, the size of firms in the country and the types of output the country produces. Table 1.1 shows the percentage of the labour force employed in agriculture and GDP per head in selected countries in 2020. Nicaraguan firms are generally quite small. They often learn the needs of individual customers, but many are not large enough to benefit from economies of scale. In recent years, coffee shops have boomed in Nicaragua. Between 2015 and 2020, the number of coffee shops in the country more than doubled. These shops set themselves apart through their customer service and the quality of the coffee they serve. Nicaragua is the world’s twelfth largest producer of coffee. Global coffee consumption continues to rise. This trend may increase Nicaragua’s coffee output and exports.

May/June 2024

The table gives the quantity demanded at a range of prices. For which decrease in price is demand price-inelastic?

May/June 2025

A German car manufacturer estimates that the price elasticity of demand (PED) for its cars is $-2.0$. What may be inferred from this information?

May/June 2025

A heatwave in July 2013 in the United Kingdom caused ice cream sales to more than double. More workers were recruited to cope with the stronger demand. Over the last few years, changes in the demand and supply conditions for ice cream have made both demand and supply more elastic. The market has also been affected by government policies and by shifts in the country’s economic growth rate.

Oct/Nov 2015

The demand for cocoa beans is price-inelastic. Which thing is most likely to fall if demand for cocoa beans rises?

Oct/Nov 2016

Several producers of jeans compete with one another. They now also have to face new sportswear that is intended to be worn as leisurewear too. As a result, competition has intensified and demand for jeans has become more price-elastic. For example, a government report has estimated that the price elasticity of demand for one of the oldest firm’s jeans in Asia is $-2.5$.

Oct/Nov 2016

The table shows the demand and supply for coffee in a market in Africa. As the price increases from $20 to $30 per kg, what is the price elasticity of demand for coffee?

Oct/Nov 2017

The table shows the demand for coffee and the supply of coffee in a market in Africa. If the price increases from $20$ to $30$ per kg, what is the price elasticity of demand for coffee?

Oct/Nov 2017

The table shows the demand and supply of coffee in an African market. When the price increases from $20$ to $30$ per kg, what is the price elasticity of demand for coffee?

Oct/Nov 2017

The table presents demand and supply for spices in a market in Africa. If the price increases from US$20 to US$30 per kg, what is the price elasticity of demand (PED) for spices?

Oct/Nov 2018

The table presents the demand and supply for spices in a market in Africa. When the price increases from $\$20$ to $\$30$ per kg, what is the price elasticity of demand (PED) for spices?

Oct/Nov 2018

The table gives the demand and supply for spices in a market in Africa. If the price increases from US$20 to US$30 per kg, what is the price elasticity of demand (PED) for spices?

Oct/Nov 2018

Drought conditions in the Pacific Coast region of the US, together with rules that cap how much salmon may be taken from the wild, have cut the supply of wild salmon. These restrictions were introduced to prevent market failure in the salmon market. Even so, the effect of this on salmon producers’ revenue is unclear. Also, producers of farmed salmon in the US states of Washington and Alaska have been given subsidies by the US government.

Oct/Nov 2018

A railway company raises ticket prices by $10\%$ for journeys between 06:00 and 09:00, which leads to a $2\%$ fall in demand. After 09:00 it cuts ticket prices by $5\%$, causing demand to rise by $7\%$. What is the price elasticity of demand in response to these price changes?

Oct/Nov 2019

Price elasticity of demand (PED) shows how sensitive demand is to a change in price. This can vary from one good to another. For which good does the table show the PED to be most elastic?

Oct/Nov 2019

What people choose to purchase as food may be affected by taxes, subsidies and health reports. A report issued in 2017 described the health advantages of eating tomatoes, such as better vision and a lower risk of heart disease. Egypt is a significant producer of tomatoes and it also makes a very large amount of cement. Cement is a product with price-inelastic demand. Cement producers in Egypt have adopted production methods that are more capital-intensive.

Oct/Nov 2019

In an African country that contains large regions of tropical desert, the price elasticity of demand for salt is highly inelastic. This will lead to higher consumer expenditure on salt when the price changes from $P_1$ to $P_2$. Which diagram shows this situation?

Oct/Nov 2020

The price elasticity of demand (PED) for bottled water is $-0.9$. What is likely to happen to the quantity demanded for bottled water if its price rises by $10\%$?

Oct/Nov 2021

The table lists the quantity demanded at several different prices. Prices and quantities demanded are: - price $\$6$, quantity $3$ - price $\$5$, quantity $4$ - price $\$4$, quantity $5$ - price $\$3$, quantity $7$ - price $\$2$, quantity $9$ For which reduction in price is demand price-inelastic?

Oct/Nov 2021

The diagram presents the demand curve for rice. What is the price elasticity of demand (PED) for rice when price rises from $\$1.0$ to $\$1.5$ per kilo?

Oct/Nov 2021

What importance does price elasticity of demand have for firms?

Oct/Nov 2022

What is meant by price elasticity of demand?

Oct/Nov 2022

Poland is the leading exporter of toothpaste in the world, and toothpaste is a product with inelastic demand. In 2019, several Polish firms that manufactured toothpaste considered carrying out a horizontal merger. Also in 2019, dentists' wages rose worldwide. That rise was especially large in the UK, where dentists were paid, on average, 25% more.

Oct/Nov 2022

What is the value of price elasticity of demand (PED) for a product when total revenue stays unchanged after the price is lowered?

Oct/Nov 2023

A hotel owner in Malaysia discovers that the price elasticity of demand (PED) for accommodation in the area is $-1.7$. If the hotel owner reduces the price of a room by $5\%$, what change would occur in the demand for a room?

Oct/Nov 2023

At a price of $10 for a good, the quantity demanded is 100 units per day. Which pair of price change and price elasticity of demand will lead to the greatest rise in the quantity demanded for the good?

Oct/Nov 2023

Which factor is a determinant of price elasticity of demand (PED)?

Oct/Nov 2023

As the price of shirts increases from $8$ to $10$, demand for shirts decreases from $1000$ to $500$. Calculate the price elasticity of demand for shirts.

Oct/Nov 2024

As the price of meat rose from $5$ to $6$ per kg, Joe cut his meat purchases from $40$ kg each month to $20$ kg each month. What was Joe’s price elasticity of demand for meat?

Oct/Nov 2024

The price elasticity of demand (PED) for a good is $-1$. What happens to both demand and total revenue when price rises?

Oct/Nov 2025