Economics 2281 · O Level · Price elasticity of demand (PED)
Price elasticity of demand (PED) — practice question
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.
(a)[2]
Identify any two factors that determine price elasticity of demand.
(b)[4]
Explain two advantages that a firm may gain from a horizontal merger.
(c)[6]
Analyse, using a demand and supply diagram, how the toothpaste market would be affected by an increase in population.
(d)[8]
Discuss whether an increase in dentists’ wages will, or will not, raise 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: “How readily substitutes are available” …