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Cambridge IGCSE Economics practice

Paper 2 structured question: Price elasticity of demand (PED)

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Price elasticity of demand (PED)

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Paper 2Structured Questions3 marks

The concept of demand elasticity is important in economic decision-making.

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Understanding Demand Elasticity

Demand elasticity refers to the responsiveness of quantity demanded to price changes. Factors influencing this include the availability of substitutes, necessity versus luxury, proportion of income, and time period.

  1. a

    Explain how the availability of substitutes affects demand elasticity.

    Aim for approximately 3 distinct marking points.

    [3]

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Paper 2 structured question: Price elasticity of demand (PED)

Paper 2Structured Questions2 marks

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Factors Affecting Demand Elasticity

Demand elasticity is influenced by several factors including the availability of substitutes, whether the good is a necessity or luxury, the proportion of income spent on the good, and the time period considered.

  1. a

    State two factors that determine whether demand is elastic or inelastic.

    Aim for approximately 2 distinct marking points.

    [2]