IGCSE Economics
Price Elasticity of Demand
1.A supplier of rice reduced the price from $10 to $8 in order to increase his revenue. As a result, the
quantity of demand has changed as follows.
Price per KG
Quantity sold (demanded)
10
100
8
110
Calculate the price elasticity of demand
2. A supplier of Apple reduced the price from $10 to $8 in order to increase his revenue. As a result,
the quantity of demand has changed as follows.
Price per KG
Quantity sold (demanded)
10
100
8
150
Calculate the price elasticity of demand
3. Price of a book increased by 10% and as a result its demand quantity decreased by 4%. Calculate the
price elasticity of demand of the book.
4. In each of the following examples, first calculate the PED and then decide if the PED is elastic,
inelastic, perfectly elastic, perfectly inelastic or unitary elastic.
a. The price of a product falls from $8 to $6, causing demand to extend from 10,000 to 12,500.
b. Demand contracts from 500 to 400 when price rises from $40 to $42.
c. Demand extends from 2,000 to 2,800 when price falls from $20 to $18.
d. Price rises from $15 to $30 but demand stays unchanged at 5,000.
e. An increase in price from $80 to $90 and as a consequence, a decrease in quantity
demanded from 400 to 300.
5. Decide in each case, whether demand is likely to be elastic or inelastic:
a. Cut flowers
b. Gold jewellery
c. Coffee
d. Train travel by commuters
e. Food.