Paper 1 · June 2009 · Price Elasticity of Demand

The price of a product rises from $18 000 to $22 000 and demand falls from 4 000 to 3 000. Calculate the coefficient of the price elasticity of demand.

A1.125

B0.4

C0.75

D1.25

Explanation

PED = (% change in quantity demanded) / (% change in price). Change in Q = -1000/4000 = -0.25 = 25%. Change in P = 4000/18000 = 2/9. PED = 0.25 / (4000/18000) = (1/4) x (9/2) = 1.125.

ZIMSEC Economics Paper 1, June 2009, Q4

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The price of a product rises from $18 000 to $22 000 and demand falls from 4 000 to 3 000. Calculate the coefficient of the price elasticity of demand.

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