Price elasticity of demand (PED)

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 elastic in response to the price change?

May/June 2017

In the UK, bus trips outside London have dropped by almost 40% since 1980. This weakening in demand has mainly resulted from higher bus fares, rising incomes, and shifts in the price and quality of substitute products. On certain routes, monopolies operate, and the absence of competition can drive the price up.

May/June 2018

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

May/June 2019

In most countries, the price elasticity of demand (PED) for sugar is below 1. During 2017, sugar prices decreased. Even so, the decline was smaller for specialised, higher quality sugar produced in places such as Mauritius than for the average world price. Efficient producers, including some farmers in Brazil with low fixed costs of production, were also less heavily affected by the price drop.

May/June 2019

On the diagram, which demand curve represents perfectly elastic demand?

May/June 2022

In 2019, France operated within its production possibility curve (PPC). France sells a broad variety of products overseas. It is the world’s leading exporter of luxury perfume and the 7th biggest exporter of soap. Technological change affects the goods people make and purchase. The French government is planning to improve its infrastructure so that every household can get internet access.

May/June 2022

A government has imposed a tax on a necessity. Producers have shifted a large part of this tax onto consumers by charging higher prices. Which row is correct?

May/June 2023

What is the most likely 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 total revenue rising if the price of the good increased?

May/June 2023

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

May/June 2024

Read the source carefully before you answer Question 1. Source material: What might the future look like for Nicaragua? Nicaragua is the largest nation in Central America. It has a substantial agricultural sector, and coffee is one of its main exports. It has been estimated that a $10\%$ change in the price of coffee will lead to a $3\%$ change in the quantity of coffee demanded. The country’s agricultural output, including coffee, is often disrupted 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 the 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 rose in 2020, as shown by both the claimant count and the labour force survey. In 2020, the purchasing power of Nicaraguan consumers declined because prices increased by more than incomes. Even so, the country’s currency, the cordoba, still remained widely accepted. 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 share of the labour force employed in agriculture, the size of the country’s firms and what 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 usually relatively small. Such firms often know the needs of their individual customers, but many are not large enough to gain economies of scale. In recent years, Nicaragua has experienced a boom in coffee shops. Between 2015 and 2020, the number of coffee shops in the country more than doubled. These shops distinguish themselves 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 indicates the quantity demanded at a range of prices. For which reduction in price is demand price-inelastic?

May/June 2025

A heatwave in July 2013 in the United Kingdom caused sales of ice cream to more than double. Extra workers were hired to cope with the stronger demand. Over recent years, the demand and supply conditions for ice cream have altered, so that demand and supply have become more elastic. The market has also been affected by government policies and by changes in the nation’s economic growth rate.

Oct/Nov 2015

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

Oct/Nov 2016

Several producers compete in the jeans market. They are also now up against new sportswear that has been designed so it can be used as leisurewear too. As competition has intensified, demand for jeans has become more price-elastic. For example, a government report estimated the price elasticity of demand for one of the oldest firm's jeans in Asia at $-2.5$.

Oct/Nov 2016

The table shows the demand and supply of 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 and supply for 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

In Saudi Arabia, cement output has increased because construction demand has grown for houses, schools, hospitals and roads. The cement market is also being influenced by price movements, export bans and mergers among cement producers.

Oct/Nov 2017

The table presents demand and supply data 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. 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

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

Oct/Nov 2019

Price elasticity of demand (PED) shows how responsive demand is when price changes. It may vary between different goods. According to the table, which good has the most elastic PED?

Oct/Nov 2019

Food choices can be influenced by taxes, subsidies and health reports. A report issued in 2017 set out the health benefits of eating tomatoes, including improved vision and a lower risk of heart disease. Egypt is a major tomato producer and it also makes a large quantity of cement. Cement is a product with price-inelastic demand. Egyptian cement producers have adopted more capital-intensive production methods.

Oct/Nov 2019

In an African country that contains extensive tropical desert regions, the price elasticity of demand for salt is very inelastic. As a result, consumer spending on salt will rise when the price changes from $P_1$ to $P_2$. Which diagram shows this situation?

Oct/Nov 2020

The table gives the quantity demanded at different prices. Prices with quantities demanded: - price $\$6$, quantity demanded $3$ - price $\$5$, quantity demanded $4$ - price $\$4$, quantity demanded $5$ - price $\$3$, quantity demanded $7$ - price $\$2$, quantity demanded $9$ For which decrease in price is demand price-inelastic?

Oct/Nov 2021

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

Oct/Nov 2021

How is price elasticity of demand defined?

Oct/Nov 2022

Poland is the world’s leading exporter of toothpaste, which has inelastic demand. In 2019, some Polish firms making toothpaste were considering a horizontal merger. Also in 2019, dentists’ wages rose across the globe. The rise was especially large in the UK, where dentists were paid, on average, 25% more.

Oct/Nov 2022

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

Oct/Nov 2023

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

Oct/Nov 2023

As the price of shirts increases from 8 to 10, demand for shirts decreases from 1000 to 500. What is the value of the price elasticity of demand for shirts?

Oct/Nov 2024

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

Oct/Nov 2024