Economics 0455 · IGCSE · Price elasticity of demand (PED)
Price elasticity of demand (PED) — practice question
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.
(a)[2]
Define what a shortage is.
(b)[4]
Explain two ways a firm can raise its profit.
(c)[6]
Analyse why the price elasticity of demand for one brand of luxury chocolates is likely to differ from that for salt.
(d)[8]
Discuss whether a country ought to import most of the food it consumes.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Demand is greater than supply” …