PED

Practice Questions – Price Elasticity of Demand

1. Original price of petrol per litre = £0.80. New price of petrol per litre = £0.88
Original quantity of demanded = 20 litres per week. New quantity of
demanded = 19 litres per week
% change in price = _10____? % change in demand = ___5___?
PED = ___-0.5___? Elastic or inelastic? What does this mean? Means that the demand is
less then the change in price

2. When the price of petrol increases 30% and the quantity of petrol bought falls by 5%, what is
the PED?-6

3. When the cinema charged £5 per ticket it made £450. When the price fell to £3 it made
£498. What is the PED? -0.5
PED

4. The PED for tomatoes is estimated to be (-)0.4. A 20% increase in price will ___decrease____
the quantity demanded by ___40__%.

5. What does it mean if the PED for text messages is (-)2.0? change in demand is more than
change in price

6. A shop increases the price of apples from 16p to 20p each and the weekly sales fall from
1200 to 800. Calculate the PED.0.75