Paper 2 · 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; Change in P = 4000/18000 = 0.222. PED = 0.25/0.222 = 1.125.

ZIMSEC Economics Paper 2, June 2009, Q4

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The price of a product rises from 18000to18 000 to 18000to22 000 and demand falls from 4 000 to 3 000. Calculate the coefficient of the price elasticity of demand.

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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.