Price elasticity of demand (PED) — Paper 1 · IGCSE Economics 0455

39 A major market for bananas from Latin America is the European Union (EU). In 2006, the EU imposed a 35 % tariff on banana imports from Latin America but not on substitutes from other regions. What impact is the tax likely to have had on the price of Latin American bananas in the EU and the revenue of Latin American producers? EU price of Latin revenue of Latin American bananas American producers A decrease decrease B decrease increase C increase increase D increase decrease

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2008

8 It was reported that a company producing designer clothes had increased its revenue by 20 % at a time when it decreased its prices. What does this suggest about the demand for these goods at that time? A It was perfectly price elastic. B It was perfectly price inelastic. C It was price elastic. D It was price inelastic.

1 marks

Answer: C

This question in 0455/11 May/June 2009

8 For what would price elasticity of demand be used? A calculating current disposable income B calculating the rate of price inflation C estimating changes in a company’s cost D identifying changes in consumer spending patterns

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2009

7 The table illustrates the demand and supply for rice in a market in Africa. price per kg ($) quantity demanded (kg) quantity supplied (kg) 10 50 10 20 40 20 30 30 30 40 20 40 When the price rises from $20 to $30 per kg, what is the approximate price elasticity of demand for rice? A 0.25 B 0.5 C 1.0 D 2.0

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2010

8 The table illustrates the demand and supply for rice in a market in Africa. price per kg ($) quantity demanded (kg) quantity supplied (kg) 10 50 10 20 40 20 30 30 30 40 20 40 When the price rises from $20 to $30 per kg, what is the approximate price elasticity of demand for rice? A 0.25 B 0.5 C 1.0 D 2.0

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2010

5 The table illustrates the demand and supply for rice in a market in Africa. price per kg ($) quantity demanded (kg) quantity supplied (kg) 10 50 10 20 40 20 30 30 30 40 20 40 When the price rises from $20 to $30 per kg, what is the approximate price elasticity of demand for rice? A 0.25 B 0.5 C 1.0 D 2.0

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2010

7 In a country where the demand for petrol (gas) is price-inelastic, the incidence of any increase in petrol tax will be mainly on A the company that refines the oil. B the motorist who buys the petrol. C the petrol station that sells the petrol. D the wholesale company that stores the petrol.

1 marks

Answer: B

This question in 0455/11 May/June 2011

16 A firm raised the price of its product from $10 to $15 and as a result its sales fell from 200 units to 150 units. What happened to its average revenue and total revenue? average revenue total revenue A decreased decreased B decreased increased C increased decreased D increased increased

1 marks

Answer: D

This question in 0455/11 May/June 2011

6 In a country where the demand for petrol (gas) is price-inelastic, the incidence of any increase in petrol tax will be mainly on A the company that refines the oil. B the motorist who buys the petrol. C the petrol station that sells the petrol. D the wholesale company that stores the petrol.

1 marks

Answer: B

This question in 0455/12 May/June 2011

6 In a country where the demand for petrol (gas) is price-inelastic, the incidence of any increase in petrol tax will be mainly on A the company that refines the oil. B the motorist who buys the petrol. C the petrol station that sells the petrol. D the wholesale company that stores the petrol.

1 marks

Answer: B

This question in 0455/13 May/June 2011

7 The graphs, drawn to the same scale, show the demand curves of four firms. The market price is $10. The price then falls to $8. Which firm will have the largest increase in total revenue? A B C D D D price price price price $ $ $ $ 10 D 10 10 10 D 0 Q1 0 Q1 0 Q1 0 Q1 quantity quantity quantity quantity

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2011

8 The graphs, drawn to the same scale, show the demand curves of four firms. The market price is $10. The price then falls to $8. Which firm will have the largest increase in total revenue? A B C D D D price price price price $ $ $ $ 10 D 10 10 10 D 0 Q1 0 Q1 0 Q1 0 Q1 quantity quantity quantity quantity

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2011

9 The graphs, drawn to the same scale, show the demand curves of four firms. The market price is $10. The price then falls to $8. Which firm will have the largest increase in total revenue? A B C D D D price price price price $ $ $ $ 10 D 10 10 10 D 0 Q1 0 Q1 0 Q1 0 Q1 quantity quantity quantity quantity

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2011

7 A shop sells chocolate birthday cakes. When the price was $15 it sold 40 cakes. It reduced the price to $10 and sold 60 cakes. What can be concluded from this? A The firm will make less profit because the price has fallen. B The firm will make more profit because sales have increased. C The price elasticity is inelastic because demand only increased by 50 %. D There is unit price elasticity because the firm’s revenue remained the same after the price change.

1 marks

Answer: D

This question in 0455/11 May/June 2012

7 The table shows the demand for chocolates at two different prices. price quantity $ demanded 0.50 400 0.45 480 What is the price elasticity of demand when the price falls from $0.50 to $0.45? A less than 0.5 B between 0.5 and 1 C between 1 and 1.5 D greater than 1.5

1 marks

Answer: D

This question in 0455/12 May/June 2012

7 The table shows the demand for chocolates at two different prices. price quantity $ demanded 0.50 400 0.45 480 What is the price elasticity of demand when the price falls from $0.50 to $0.45? A less than 0.5 B between 0.5 and 1 C between 1 and 1.5 D greater than 1.5

1 marks

Answer: D

This question in 0455/13 May/June 2012

7 When the price of shirts rises from $8 to $10, the demand for shirts falls from 1000 to 500. What is the price elasticity of demand for shirts? A greater than 1 B unitary C less than 1 D zero

1 marks

Answer: A

This question in 0455/11 May/June 2013

9 When the price of a good doubles the demand falls by less than half, and the revenue received by the seller increases. What does this suggest about the good? A it has substitutes B it is a necessity C it is in fixed supply D it is perfectly elastic in demand

1 marks

Answer: B

This question in 0455/11 May/June 2013

7 A recent study has found that the price elasticity of demand for cigarettes in the USA is –0.7. What can be concluded from this information? A A fall in the price of cigarettes would lead to a fall in the revenue of cigarette producers. B A rise in the price of cigarettes would lead to a fall in consumer expenditure on cigarettes. C A 7% increase in the price of cigarettes would reduce the quantity demanded by 10%. D A 10% increase in the cost of producing cigarettes would lead to a 7% fall in the quantity demanded.

1 marks

Answer: A

This question in 0455/12 May/June 2013

9 When the price of a good doubles the demand falls by less than half, and the revenue received by the seller increases. What does this suggest about the good? A it has substitutes B it is a necessity C it is in fixed supply D it is perfectly elastic in demand

1 marks

Answer: B

This question in 0455/12 May/June 2013

9 The graph shows the impact of a tax on the supply of petrol (gas). D S2 S1 price O quantity What can be concluded from this graph? A the government will receive no tax revenue B the impact of the tax will be shared between the consumer and the producer C the impact of the tax will fall entirely upon the consumer D the impact of the tax will fall entirely on the producer

1 marks

Answer: C

This question in 0455/13 May/June 2013

16 When the price of shirts rises from $8 to $10, the demand for shirts falls from 1000 to 500. What is the price elasticity of demand for shirts? A greater than 1 B unitary C less than 1 D zero

1 marks

Answer: A

This question in 0455/13 May/June 2013

18 When the price of a good doubles the demand falls by less than half, and the revenue received by the seller increases. What does this suggest about the good? A it has substitutes B it is a necessity C it is in fixed supply D it is perfectly elastic in demand

1 marks

Answer: B

This question in 0455/13 May/June 2013

7 Many people are life-long, devoted fans of the Los Angeles Lakers basketball team in the United States. The team’s stadium can seat 19 000 spectators and tickets are always sold out. What does this suggest about the price elasticity of demand and the price elasticity of supply of tickets to watch the Lakers play? price elasticity of demand price elasticity of supply A highly elastic perfectly elastic B highly elastic perfectly inelastic C highly inelastic perfectly elastic D highly inelastic perfectly inelastic

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2013

1 What is most likely to influence the price elasticity of demand for a food? A a change in consumer tastes B the number of close substitutes C the rate of inflation D whether the food can be stored easily

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2014

10 Asda, a supermarket chain, noticed a regular, sharp decrease in sales in the third week of the month as people ran out of cash before their next wage payment. The supermarket offered their biggest price reductions at that time. Why might this policy increase total revenue? A because consumers’ demand curve shifts to the left in the third week of the month B because consumers’ demand curve shifts to the right in the third week of the month C because the price elasticity of demand for Asda’s products decreases in the third week of the month D because the price elasticity of demand for Asda’s products increases in the third week of the month

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2014

4 What is most likely to influence the price elasticity of demand for a food? A a change in consumer tastes B the number of close substitutes C the rate of inflation D whether the food can be stored easily

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2014

11 Asda, a supermarket chain, noticed a regular, sharp decrease in sales in the third week of the month as people ran out of cash before their next wage payment. The supermarket offered their biggest price reductions at that time. Why might this policy increase total revenue? A because consumers’ demand curve shifts to the left in the third week of the month B because consumers’ demand curve shifts to the right in the third week of the month C because the price elasticity of demand for Asda’s products decreases in the third week of the month D because the price elasticity of demand for Asda’s products increases in the third week of the month

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2014

6 In recent years, the demand for cars in Indonesia has become more price inelastic while the supply of cars has become more price elastic. Which combination of events could have caused these changes? quality of public time taken to transport produce a car A decreased decreased B decreased increased C increased decreased D increased increased

1 marks

Answer: A

This question in 0455/13 May/June 2015

13 A company decided to reduce the price of its product by 10%. What would happen? A The firm’s costs would decrease if the elasticity of demand was greater than one. B The firm’s profits would increase if the elasticity of demand was greater than one. C The firm’s revenue would increase if the elasticity of demand was greater than one. D The quantity sold would decrease if the elasticity of demand was less than one.

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2015

10 A national trade union wishes to increase the wages of its members without reducing the numbers employed. Which factor would help the union to do this? A The demand for the industry’s product is high. B The industry consists of a small number of well-organised employers. C The union workers have low-level skills. D The workers’ wages are the largest cost of the industry.

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2015

5 A product has a totally inelastic price elasticity of demand. What will happen to total revenue if the price of the product falls by 25%? A It will fall by 25%. B It will fall to zero. C It will remain unchanged. D It will rise by 25%.

1 marks

Answer: A

This question in 0455/12 Feb/March 2016

5 The demand for cocoa beans is price-inelastic. What is most likely to decrease as a result of an increase in demand for cocoa beans? A price of cocoa bean products B production of cocoa beans C profits of cocoa bean producers D unemployment among cocoa bean farmers

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2016

7 A product has a price elasticity of demand that is greater than one. What will happen to total revenue if the price of the product is reduced by 3%? A It will fall by more than 3%. B It will fall to zero. C It will be unchanged. D It will rise.

1 marks

Answer: D

This question in 0455/12 Feb/March 2017

6 A football club raises all stadium seat prices by 5%. The stadium is divided into four zones. The demand for seats falls by 1% in zone W, by 3% in zone X, by 5% in zone Y and by 6% in zone Z. In which zone is the responsiveness of demand for seats to the price change elastic? A zone W B zone X C zone Y D zone Z

1 marks

Answer: D

This question in 0455/11 May/June 2017

4 The table shows four people’s demand for t-shirts at two prices. price of t-shirt demand for t-shirts (units) $ Elsa George Hamid Shara 10 4 6 3 5 15 2 3 1 4 Who has the most elastic demand for t-shirts when the price rises from $10 to $15? A Elsa B George C Hamid D Shara

1 marks

Answer: C

This question in 0455/13 May/June 2017

6 The table illustrates the demand and supply for coffee in a market in Africa. price per kg quantity demanded quantity supplied ($) (kg) (kg) 10 50 10 20 40 20 30 30 30 40 20 40 50 10 50 When the price rises from $20 to $30 per kg, what is the price elasticity of demand for coffee? A 0.2 B 0.5 C 2.0 D 5.0

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2017

6 The table illustrates the demand and supply for coffee in a market in Africa. price per kg quantity demanded quantity supplied ($) (kg) (kg) 10 50 10 20 40 20 30 30 30 40 20 40 50 10 50 When the price rises from $20 to $30 per kg, what is the price elasticity of demand for coffee? A 0.2 B 0.5 C 2.0 D 5.0

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2017

6 The table illustrates the demand and supply for coffee in a market in Africa. price per kg quantity demanded quantity supplied ($) (kg) (kg) 10 50 10 20 40 20 30 30 30 40 20 40 50 10 50 When the price rises from $20 to $30 per kg, what is the price elasticity of demand for coffee? A 0.2 B 0.5 C 2.0 D 5.0

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2017

7 The table shows the demand and supply for spices in a market in Africa. price quantity quantity per kg (US$) demanded (kg) supplied (kg) 10 50 10 20 40 20 30 30 30 40 20 40 When the price rises from US$20 to US$30 per kg, what is the price elasticity of demand (PED) for spices? A 0.25 B 0.5 C 1.0 D 2.0

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2018

10 What will make it harder for a trade union to increase the wage rate for its members, without reducing employment? A a switch from short-term to long-term fixed contracts of employment B an increase in the number of substitutes for the product C growth in an economy and increased demand for labour D lower price elasticity of demand for the product

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2018

7 The table shows the demand and supply for spices in a market in Africa. price quantity quantity per kg (US$) demanded (kg) supplied (kg) 10 50 10 20 40 20 30 30 30 40 20 40 When the price rises from US$20 to US$30 per kg, what is the price elasticity of demand (PED) for spices? A 0.25 B 0.5 C 1.0 D 2.0

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2018

7 The table shows the demand and supply for spices in a market in Africa. price quantity quantity per kg (US$) demanded (kg) supplied (kg) 10 50 10 20 40 20 30 30 30 40 20 40 When the price rises from US$20 to US$30 per kg, what is the price elasticity of demand (PED) for spices? A 0.25 B 0.5 C 1.0 D 2.0

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2018

10 What would put a trade union in a strong bargaining position to negotiate higher wages for its members in a particular firm? A The demand for the product produced by the workers has an inelastic demand. B The economy is experiencing high unemployment. C The proportion of the firm’s workers in the union is low. D Wage costs are a high proportion of total costs for firms in the industry.

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2018

7 A mobile (cell) phone operator increases the price of making calls on its network. After the price increase, the revenue of the mobile phone operator falls by 10%. What is the price elasticity of demand (PED) for the mobile operator’s service? A elastic B inelastic C perfectly elastic D unit elastic

1 marks

Answer: A

This question in 0455/12 May/June 2019

28 The world demand for oil is price-inelastic and oil is paid for in US dollars. If the price of oil falls rapidly, how might it affect the exchange rate of the US dollar? market for US dollar exchange rate for US dollar A greater demand for US$ value increases B greater supply of US$ value falls C less demand for US$ value falls D less supply of US$ value increases

1 marks

Answer: C

This question in 0455/12 May/June 2019

7 A product has a price elasticity of demand of – 0.5. What happens to the demand for a product if its price falls from $1 to $0.80? A It decreases by 10%. B It decreases by 20%. C It increases by 10%. D It increases by 20%.

1 marks

Answer: C

This question in 0455/13 May/June 2019

8 The demand for gas in a country becomes price-inelastic. What will happen as a result? A Gas workers will be less likely to be successful in obtaining wage increases. B Gas workers will be more likely to be successful in obtaining wage increases. C Total expenditure on gas by consumers will fall when its price rises. D Total expenditure on gas by consumers will rise when its price falls.

1 marks

Answer: B

This question in 0455/13 May/June 2019

7 A railway company increases ticket prices by 10% for travel between 06:00 and 09:00, causing a reduction in demand by 2%. After 09:00 it reduces ticket prices by 5%, resulting in a 7% increase in demand. What is the price elasticity of demand in response to these price changes? between 06:00 after 09:00 and 09:00 A elastic elastic B elastic inelastic C inelastic elastic D inelastic inelastic

1 marks

Answer: C

This question in 0455/12 Oct/Nov 2019

7 Price elasticity of demand (PED) measures the responsiveness of demand to a change in price. It can differ for different goods. For which good is the PED most elastic according to the table? percentage change percentage good in quantity demanded change in price A butter 6.0 5.0 B cars 5.5 5.0 C furniture 5.0 5.0 D petrol 3.0 5.0

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2019

7 The price of bread rose by 5% and the quantity demanded fell by 4%. What was the price elasticity of demand for bread? A –0.4 B –0.8 C –1.25 D –2.0

1 marks

Answer: B

This question in 0455/12 May/June 2020

11 People’s income decreases. How is the proportion spent on food and leisure likely to change? food leisure A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: C

This question in 0455/13 May/June 2020

7 In an African country with large areas of tropical desert the price elasticity of demand for salt is highly inelastic. This will result in greater consumer expenditure on salt when price changes from P1 to P2. Which diagram illustrates this situation? A B price price of salt of salt P2 P2 P1 P1 D D O quantity O quantity C D price price of salt of salt P2 P2 P1 D P1 D O quantity O quantity

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2020

8 The price elasticity of demand (PED) for bottled water is – 0.9. What will happen to the quantity demanded for bottled water if its price increases by 10%? A decrease by 0.9% B decrease by 9% C increase by 0.9% D increase by 9%

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2021

8 The table shows the quantity demanded at different prices. quantity price $ demanded 6 3 5 4 4 5 3 7 2 9 For which fall in price is the demand price-inelastic? A from $6 to $5 B from $5 to $4 C from $4 to $3 D from $3 to $2

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2021

8 The diagram shows the demand curve for rice. 2.5 price $ per kilo 2.0 1.5 1.0 D 0 0 10 20 2730 40 quantity (kilos) What is the price elasticity of demand (PED) for rice as price increases from $1.0 to $1.5 per kilo? A 0 B 1 C less than 1 D greater than 1

1 marks

Answer: C

This question in 0455/13 Oct/Nov 2021

7 In the diagram, which demand curve has perfectly elastic demand? A B C price D O quantity

1 marks

Answer: D

This question in 0455/12 May/June 2022

7 Which statement about price elasticity of demand (PED) is correct? A PED measures the percentage change in quantity demanded divided by the percentage change in price. B PED measures the change in price divided by the change in the quantity demanded. C PED means a change in price will cause an equal change in the quantity demanded. D PED means a change in demand will result in a greater percentage change in price.

1 marks

Answer: A

This question in 0455/13 May/June 2022

10 A cinema has 500 seats. It raised its admission price from $2 to $5 and daily revenue increased from $800 to $1500. What can be concluded from this information? A Price elasticity of demand for cinema seats was elastic. B Price elasticity of supply of cinema seats was elastic. C The cinema operated below full capacity. D The cinema’s profits rose by $700.

1 marks

Answer: C

This question in 0455/13 May/June 2022

17 A government decides to increase the indirect tax on petrol. Petrol has an inelastic price elasticity of demand. What are likely to be the consequences? quantity of government petrol bought revenue A decreases decreases B decreases increases C increases decreases D increases increases

1 marks

Answer: B

This question in 0455/13 May/June 2022

7 What is the significance to firms of price elasticity of demand? A It allows firms to measure the effect of a change in the price of their competitors. B It allows firms to measure their ability to change production due to a change in price. C It allows firms to predict the change in costs of production. D It allows firms to predict the effect of a change in price on their total revenue.

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2022

7 What is the definition of price elasticity of demand? A the responsiveness of quantity demanded of a product to a change in income of consumers B the responsiveness of quantity demanded of a product to a change in the price of a complementary product C the responsiveness of quantity demanded of a product to a change in the price of that product D the responsiveness of quantity demanded of a product to a change in the price of a substitute product

1 marks

Answer: C

This question in 0455/12 Oct/Nov 2022

7 A government places an indirect tax on a good which has price-elastic demand. What is the result? total expenditure quantity demanded on the good of the good A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: A

This question in 0455/12 Feb/March 2023

8 The price elasticity of demand for cigarettes is estimated to be 0.5. The government introduces a tax on cigarettes to reduce consumption. By how much must the price of cigarettes rise to reduce consumption by 10%? A 5% B 10% C 15% D 20%

1 marks

Answer: D

This question in 0455/12 Feb/March 2023

7 What is the most likely cause of a product having a price elasticity of demand greater than one? A The product has a close substitute. B The product is a habit-forming good. C The product is a necessity. D The product requires only a small proportion of consumer income.

1 marks

Answer: A

This question in 0455/11 May/June 2023

21 A government has introduced a tax on a necessity. Producers have passed on a large proportion of this tax to consumers in the form of higher prices. Which row is correct? price elasticity type of tax of demand A direct price elastic B direct price inelastic C indirect price elastic D indirect price inelastic

1 marks

Answer: D

This question in 0455/11 May/June 2023

6 Which price elasticity of demand (PED) would cause an increase in total revenue if the price of the good increased? A perfectly elastic B relatively elastic C relatively inelastic D unitary elastic

1 marks

Answer: C

This question in 0455/12 May/June 2023

7 What is the value of the price elasticity of demand (PED) for a product if total revenue remains the same when the price is reduced? A zero B between 0 and 1 C greater than 1 D 1

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2023

8 The owner of a hotel in Malaysia finds that the price elasticity of demand (PED) for accommodation in the area is –1.7. If the hotel owner decreases the price of a room by 5%, how would the demand for a room change? A It would decrease by 2.9%. B It would decrease by 8.5%. C It would increase by 2.9%. D It would increase by 8.5%.

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2023

5 What is a determinant of price elasticity of demand (PED)? A availability of stocks of the product B change in the income of consumers C degree of necessity of the product D existence of monopoly

1 marks

Answer: C

This question in 0455/13 Oct/Nov 2023

10 When the price of a good is $10, the quantity demanded is 100 units per day. Which combination of price change and price elasticity of demand will cause the largest increase in the quantity demanded for the good? price elasticity price change of demand A price falls to $9 0.8 B price falls to $9 1.2 C price rises to $11 0.8 D price rises to $11 1.2

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2023

9 A firm is considering doubling the price of its product. Which price elasticity of demand (PED) for its product would give it the greatest increase in revenue? A 0.0 B −0.5 C −1.0 D −2.0

1 marks

Answer: A

This question in 0455/12 Feb/March 2024

15 At a price of $5, the demand for a firm’s product is 1000 units per week. When its price rises to $10, the demand for its product falls to 600 units per week. What are the changes in the firm’s average revenue (AR) and total revenue (TR) per week when the price of its product rises? change in TR change in AR per week $ $ A +5 +1000 B +5 +6000 C +10 +1000 D +10 +6000

1 marks

Answer: A

This question in 0455/12 Feb/March 2024

6 An explosion in an important oil pipeline causes the world price of a barrel of oil to increase from $50 to $100. Before the explosion, the world demand for oil was 100 million barrels per day. The world price elasticity of demand for oil is −0.2. What is the new global demand for oil (barrels per day) as a result of the explosion? A 20 million B 80 million C 90 million D 120 million

1 marks

Answer: B

This question in 0455/13 May/June 2024

8 When the price of shirts rises from $8 to $10, the demand for shirts falls from 1000 to 500. What is the value of the price elasticity of demand for shirts? A greater than 1 B unitary C less than 1 D zero

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2024

7 When the price of meat increased from $5 to $6 per kg, Joe decreased his purchase of meat from 40kg to 20kg a month. What was Joe’s price elasticity of demand for meat? A 0.4 B 2.0 C 2.5 D 20

1 marks

Answer: C

This question in 0455/13 Oct/Nov 2024

7 The price elasticity of demand for smartphones is believed to be −2.0. A manufacturer decides to cut prices by 10%. What will be the effect of this change in price? A demand will fall by 20% B demand will rise by 5% C quantity supplied will remain unchanged D revenue will increase

1 marks

Answer: D

This question in 0455/12 Feb/March 2025

28 The US puts a 25% tariff on Chinese steel to protect jobs in the US steel industry. Under which condition would this policy be most effective? A The price elasticity of demand for Chinese steel is –2.5. B The price elasticity of demand for Chinese steel is –0.5. C The price elasticity of supply for Chinese steel is 2.5. D The price elasticity of supply for Chinese steel is zero.

1 marks

Answer: A

This question in 0455/12 Feb/March 2025

7 The table shows the quantity demanded at different prices. quantity price $ demanded 6 3 5 4 4 5 3 7 2 9 For which fall in price is the demand price-inelastic? A from $6 to $5 B from $5 to $4 C from $4 to $3 D from $3 to $2

1 marks

Answer: D

This question in 0455/11 May/June 2025

7 A German car producer estimates the price elasticity of demand (PED) for its cars is −2.0. What can be concluded from this information? A its cars are price elastic B its cars are price inelastic C its cars are unitary elastic D its cars take time to produce

1 marks

Answer: A

This question in 0455/13 May/June 2025

28 The UK government increases the price of steel imported from Germany by increasing an existing tariff. Assuming steel has price-inelastic demand, what would be the effect on the revenues of German steel producers and the UK government? German steel UK producers’ government revenue revenue A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: B

This question in 0455/13 May/June 2025

7 The price elasticity of demand (PED) of a good is –1. What will happen to both demand and total revenue as price increases? A demand will fall and total revenue will not change B demand will fall and total revenue will rise C demand will rise and total revenue will not change D demand will rise and total revenue will rise

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2025