PRICE ELASTICITY OF DEMAND[IGCSE ECONOMICS]

A product has a price elasticity of demand that is greater than one.

What will happen to total revenue if the price of the product is reduced by 3%?

• It will fall by more than 3%.

• It will fall to zero.

• It will be unchanged.

• It will rise.

A product has a totally inelastic price elasticity of demand.

What will happen to total revenue if the price of the product falls by 25%?

• It will fall by 25%.

• It will fall to zero.

• It will remain unchanged.

• It will rise by 25%.

A demand curve shows the relationship between the quantity demanded and

• a change in income

• consumer tastes

• the supply of the product

• the price of the product

When the price of a good doubles the demand falls by less than half, and the revenue received by the seller increases. What does this suggest about the good?

• it has substitutes

• it is a necessity

• it is in fixed supply

• it is perfectly elastic in demand

Which statement could explain a decrease in the demand for natural rubber?

• The area of land on which rubber is grown has increased

• Productivity of rubber plantations has increased.

• New techniques of producing substitutes for rubber have been introduced.

• Demand for car tyres has increased.

What is meant by an equilibrium price?

• a government price that ensures fairness for all

• a price that has no pressure to rise or fall

• a price that maximises the profits of the producers

• a price that maximises the satisfaction of the consumers

A mobile (cell) phone operator increases the price of making calls on its network. After the price increase, the revenue of the mobile phone operator falls by 10%.

What is the price elasticity of demand (PED) for the mobile operator’s service?

• unit elastic

• perfectly elastic

• inelastic

• elastic

Necessities have inelastic demand.

• True

• False

Sofa has inelastic demand.

• True

• false

PED shows the percentage change in quantity demanded with percentage change in price.

• True

• False