Economics (AS & A Level) · Oct / Nov 2023 · Paper 11 · Question 6
9708Price elasticity, income elasticity and cross elasticity of demand
The diagram shows a demand curve for pineapples. [diagram: demand curve with price ($) on vertical axis from 0 to 2 and quantity (000s) on horizontal axis from 0 to 12; points X at (3, 1.5) and Y at (9, 0.5) on the curve D] What happens to the value of price elasticity of demand (PED) when there is a movement from point X to point Y and what describes the value of PED at point Y?
- Aeffect on value of PED: fall; value of PED at Y: elastic
- Beffect on value of PED: fall; value of PED at Y: inelastic
- Ceffect on value of PED: rise; value of PED at Y: elastic
- Deffect on value of PED: unchanged; value of PED at Y: unitary
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Correct answer: B. effect on value of PED: fall; value of PED at Y: inelastic
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