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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 Questions1 marks

A company sells a product with elastic demand.

Description

Impact of Price Change on Revenue

The company decides to reduce the price of its product from $20 to $15. Previously, it sold 100 units per month. After the price reduction, sales increased to 150 units per month.

  1. a

    State What type of demand does this product exhibit?

    Aim for approximately 1 distinct marking point.

    [1]

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

Paper 2Structured Questions2 marks

Description

Revenue Analysis

The business notices that when it raised the price of its product from $10 to $12, total revenue decreased from $500 to $400.

  1. a

    Explain What does this indicate about the price elasticity of demand for this product?

    Aim for approximately 2 distinct marking points.

    [2]