PED PES Revenue

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IGCSE Economics
Price Elasticity of Demand and Supply HW9
Activity – 1 (5 minutes)
a.) The price of packet of Salt has increased and as a result the quantity of demand has fallen as follows.
Price per packet
Quantity of demand
6
200
9
160
Calculate its PED and explain the changes in sales revenue.
b.) The price of Banana per KG has increased from $20 to $22 and its quantity demanded has fallen
from 400 units to 300 units.
Calculate its PED and explain the changes in sales revenue.
Activity 2 – (7 minutes)
Price elasticity of a certain product is 2. Would you advise the seller of this product to increase the
selling price in order to increase his sales income? Justify your answer.[4]
Activity 3 – (4 minutes)
In each case, calculate the PES:
a. A fall in price from $5 to $4 causes supply to contract from 10,000 to 4,000.
b. Supply extends from 200 to 210 when price rises from $10 to $14.
Activity 4 – (4 minutes)
Decide in each case, whether supply is likely to be elastic or inelastic:
a. elastic bands
b. tee-shirts
c. aircraft
d. pencils
e. lamb.
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