Economics 0455 · IGCSE · Price elasticity of demand (PED)
Price elasticity of demand (PED) — practice question
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.
(a)[2]
Identify one distinction between land and labour.
(b)[4]
Explain two reasons why demand for a product may be price-inelastic.
(c)[6]
Analyse why households in one country may borrow more than households in another country.
(d)[8]
Discuss whether a government ought to encourage more people to cycle.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Land is a natural resource, whereas labour is a human resource” …