Economics 0455 · IGCSE · Price elasticity of demand (PED)
Price elasticity of demand (PED) — practice question
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.
(a)[2]
Identify two determinants of price elasticity of demand.
(b)[4]
Explain two advantages to a firm of a horizontal merger.
(c)[6]
Analyse, using a demand and supply diagram, how the market for toothpaste would be affected by an increase in population.
(d)[8]
Discuss whether or not an increase in the wages of dentists will increase the number of dentists employed.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Availability of substitutes” …