A-Level - PED, YED, XED

Price elasticity of demand is:

• A. the change in demand given a change in price.

• B. how the price changes given a change in quantity demanded.

• C. the percentage change in quantity demanded given a change in price.

• D. the percentage change in quantity demanded given a percentage change in price.

Along a downward sloping demand curve, the value of price elasticity of demand:

• A. falls as the quantity demanded increases.

• B. increases as the quantity demanded increases.

• C. is the same along the demand curve.

• D. varies with the level of expenditure.

The price of a can of iced tea increases from $1.00 to $1.10.

The quantity demanded falls from 300 cans a week to 240 cans a week.

Calculate the price elasticity of demand.

• A. −0.5

• B. −2.5

• C. −2.0

• D. −2.22

If the price elasticity of demand for a product is equal to 0.5, then a 10% decrease in price will:

• A. increase quantity demanded by 5%.

• B. increase quantity demanded by 0.5%.

• C. decrease quantity demanded by 5%.

• D. decrease quantity demanded by 0.5%.

The price elasticity of demand for a product is 1.

Which of the following changes is correct?

• A. A rise in price will result in total spending on the product to rise and then fall.

• B. A rise in price will result in no change in total spending on the product.

• C. A fall in price will result in an increase in total spending on the product.

• D. A fall in price will lead to an increase in quantity demanded but total spending on the product will fall.

Why must total spending on a product increase when its price increases?

• A. if demand for the product is price elastic

• B. if demand for the product is price inelastic

• C. if the price of a substitute product increases

• D. if the price of a complementary product increases

If instant food are an inferior good:

• A. demand will increase as income increases.

• B. supply will increase to satisfy the increase in demand.

• C. demand will fall as income increases.

• D. demand will be unchanged as income increases.

Given the value of income elasticity of demand.

Which of the following is likely to be a basic necessity?

• A. a new pair of trainers +1.5

• B. a visit to KFC or McDonald’s +0.8

• C. petrol for the motorcycle +0.2

• D. a trip to a Premier League cricket or football game +2.5

The cross elasticity of demand for the change in quantity of a brand of cooking oil compared to a change in price of another brand is +1.3. Which of the following best describes the relationship between the two brands?

• A. complement and elastic

• B. complement and inelastic

• C. substitute and elastic

• D. substitute and inelastic

The cross elasticity of demand for Australian tourists visiting Indonesia is 2.4 when the price of visits to Malaysia increases by 5%.

What is the percentage change in the number of Australian tourists visiting Indonesia?

• A. 5%

• B. 0.48%

• C. 2.08%

• D. 12%