WorksheetsPrice Elasticity of Demand (PED) Worksheet
Total questions: 17
Worksheet time: 9mins
What is the formula for calculating the price elasticity of demand (PED) of a good?
Percentage change in price / Percentage change in quantity demanded
Percentage change in quantity demanded / Percentage change in price
Price / Quantity demanded
Quantity demanded / Price
For product A in Figure 8.1, when price falls from £10 to £8, what is the price elasticity of demand (PED)?
-0.5
-2.5
0.5
2.5
For product B in Figure 8.1, when price falls from £10 to £8, what is the price elasticity of demand (PED)?
-0.5
-2.5
0.5
2.5
If the value of PED is less than 1 (that is, a fraction or a decimal), demand is said to be ________.
inelastic
elastic
unitary
perfectly elastic
If the value of PED is greater than 1, demand is said to be ________.
elastic
inelastic
unitary
perfectly inelastic
If the value of PED is zero, demand is said to be perfectly inelastic.
True
False
If PED is equal to infinity (∞), demand is said to be perfectly elastic.
True
False
If PED is exactly -1, demand is said to have ________ elasticity.
unitary
perfectly elastic
perfectly inelastic
relatively elastic
A vertical demand curve in Figure 8.4 indicates which of the following about the price elasticity of demand?
The price elasticity of demand is zero.
The price elasticity of demand is infinite.
The price elasticity of demand is one.
The price elasticity of demand is greater than one.
The horizontal demand curve in Figure 8.4 shows a demand curve for a good that has perfectly elastic demand. What happens to the quantity demanded if the price rises above p1?
The quantity demanded will fall to zero.
The quantity demanded will increase sharply.
The quantity demanded will remain unchanged.
The quantity demanded will decrease slightly.
What is the value of price elasticity in the case of a perfectly elastic demand curve?
infinite
zero
one
greater than one
The demand curve in Figure 8.5 shows the shape of a demand curve where PED = -1. What is the total revenue when the price is £10 and the quantity demanded is 50 units?
£500
£100
£5,000
£50
When the price is £5 and the quantity demanded is 100 units, what is the total revenue according to the demand curve in Figure 8.5?
£500
£100
£50
£5
In Figure 8.1, which demand curve shows a relatively inelastic demand curve?
D_A
D_B
D_C
D_D
In Figure 8.1, which demand curve is relatively elastic?
D_B
D_A
D_C
D_D
Calculate the PED for Hepton Tennis Club membership.
-1.25
0.75
1.50
-0.80
What evidence is there in the case to suggest that demand is elastic in this example?
A significant change in quantity demanded following a price change
No change in quantity demanded despite a price change
A decrease in supply leading to higher prices
An increase in production costs causing higher prices
