Price elasticity, income elasticity and cross elasticity of demand
2.2What the syllabus asks of you
- definition of price elasticity, income elasticity and cross elasticity of demand (PED, YED, XED)
- formulae for and calculation of price elasticity, income elasticity and cross elasticity of demand
- significance of relative percentage changes, the size and sign of the coefficient of: price elasticity of demand
- significance of relative percentage changes, the size and sign of the coefficient of: income elasticity of demand
- significance of relative percentage changes, the size and sign of the coefficient of: cross elasticity of demand
- descriptions of elasticity values: perfectly elastic, (highly) elastic, unitary elasticity, (highly) inelastic, perfectly inelastic
- variation in price elasticity of demand along the length of a straight-line demand curve
- factors affecting: price elasticity of demand
- factors affecting: income elasticity of demand
- factors affecting: cross elasticity of demand
- relationship between price elasticity of demand and total expenditure on a product
- implications for decision-making of price elasticity, income elasticity and cross elasticity of demand
Drill this topic
Every question on Price elasticity, income elasticity and cross elasticity of demand, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
68 questions
1May / June 2026 · Paper 11 · Q8Show mark scheme →
AIt measures the responsiveness of income to a change in quantity demanded.
BIt measures the responsiveness of income to a change in price.
CIt measures the responsiveness of quantity demanded to a change in income.
DIt measures the responsiveness of quantity demanded to a change in price.
Mark scheme
2May / June 2026 · Paper 11 · Q11Show mark scheme →
Awhen the demand for sugary drinks is income elastic
Bwhen the demand for sugary drinks is income inelastic
Cwhen the demand for sugary drinks is price elastic
Dwhen the demand for sugary drinks is price inelastic
Mark scheme
3May / June 2026 · Paper 11 · Q15Show mark scheme →
A0
B0.5
C1.0
D1.5
Mark scheme
4May / June 2026 · Paper 12 · Q10Show mark scheme →
A0.5
B0.8
C1.6
D2.0
Mark scheme
5May / June 2026 · Paper 13 · Q7Show mark scheme →
Adecreases
Bincreases by a large amount
Cincreases by a small amount
Dstays unchanged
Mark scheme
6May / June 2026 · Paper 14 · Q9Show mark scheme →
Aexpenditure on phones falls; expenditure on apps falls
Bexpenditure on phones rises; expenditure on apps falls
Cexpenditure on phones falls; expenditure on apps unchanged
Dexpenditure on phones rises; expenditure on apps unchanged
Mark scheme
7Oct / Nov 2025 · Paper 11 · Q8Show mark scheme →
AWhen income rises less of the good is bought.
BWhen income rises more of the good is bought.
CWhen price falls more of the good is bought.
DWhen price rises less of the good is bought.
Mark scheme
8Oct / Nov 2025 · Paper 12 · Q8Show mark scheme →
A$0
B$50
C$100
Devery price along the demand curve
Mark scheme
9Oct / Nov 2025 · Paper 12 · Q9Show mark scheme →
AIt is an inferior good.
BIt is a necessity.
CIt is a normal good.
DIt has close substitutes.
Mark scheme
10Oct / Nov 2025 · Paper 13 · Q9Show mark scheme →
Aa normal good that is a complement to good Y
Ba normal good that is a substitute for good Y
Can inferior good that is a complement to good Y
Dan inferior good that is a substitute for good Y
Mark scheme
11Oct / Nov 2025 · Paper 14 · Q7Show mark scheme →
A9000
B9600
C10 000
D10 400
Mark scheme
12May / June 2025 · Paper 12 · Q7Show mark scheme →
AWhen it is a luxury good.
BWhen it is a necessity good.
CWhen it is a normal good.
DWhen it is an inferior good.
Mark scheme
13May / June 2025 · Paper 13 · Q9Show mark scheme →
AIt helps firms differentiate between goods with elastic and inelastic demand.
BIt helps firms differentiate between normal and inferior goods.
CIt helps firms predict the changes in the quantity demanded.
DIt helps firms predict the changes in sales revenues.
Mark scheme
14May / June 2025 · Paper 14 · Q8Show mark scheme →
Aincome elasticity –1.2; cross elasticity –0.9
Bincome elasticity –1.2; cross elasticity +0.9
Cincome elasticity +1.2; cross elasticity –0.9
Dincome elasticity +1.2; cross elasticity +0.9
Mark scheme
15Feb / March 2025 · Paper 12 · Q8Show mark scheme →
A$81.00
B$84.00
C$92.00
D$108.00
Mark scheme
16Feb / March 2025 · Paper 12 · Q11Show mark scheme →
AIt is between zero and one.
BIt is infinite.
CIt is unitary.
DIt is zero.
Mark scheme
17Oct / Nov 2024 · Paper 11 · Q8Show mark scheme →
ARestaurant owners will receive more income.
BLee will spend more money on both cinema tickets and restaurant meals.
CYim will spend more money on both cinema tickets and restaurant meals.
DCinema owners will receive less income.
Mark scheme
18Oct / Nov 2024 · Paper 13 · Q9Show mark scheme →
AThe good is a complement and inferior.
BThe good is a complement and normal.
CThe good is a substitute and inferior.
DThe good is a substitute and normal.
Mark scheme
19May / June 2024 · Paper 11 · Q8Show mark scheme →
ADemand for an inferior good has a positive relationship to income and a negative relationship to price.
BDemand for an inferior good has a negative relationship to income and a negative relationship to price.
CDemand for a normal good has a positive relationship to income and a positive relationship to price.
DDemand for a normal good has a negative relationship to income and a positive relationship to price.
Mark scheme
20May / June 2024 · Paper 11 · Q10Show mark scheme →
AIn a period of economic growth, its total revenue should increase.
BIn a period of economic recession, its total revenue should increase.
CIt has few substitutes so it should increase its price to increase total revenue.
DIt has many substitutes so it should decrease price to increase total revenue.
Mark scheme
21May / June 2024 · Paper 13 · Q8Show mark scheme →
A$9.00
B$9.60
C$10.00
D$10.60
Mark scheme
22Feb / March 2024 · Paper 12 · Q7Show mark scheme →
Ainferior good, price-elastic demand and substitute for good Y
Binferior good, price-inelastic demand and complement to good Y
Cnormal good, price-elastic demand and complement to good Y
Dnormal good, price-inelastic demand and substitute for good Y
Mark scheme
23Feb / March 2024 · Paper 12 · Q8Show mark scheme →
ABoth X and Y are unit price elastic over their whole length.
BBoth X and Y have the same elasticity at every price.
CX has a higher price elasticity than Y at every price.
DY is more likely to have substitutes than X.
Mark scheme
24Oct / Nov 2023 · Paper 11 · Q6Show mark scheme →
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
Mark scheme
25Oct / Nov 2023 · Paper 11 · Q8Show mark scheme →
Acream, yoghurt, raspberry
Byoghurt, strawberry, raspberry
Cstrawberry, cream, raspberry
Dstrawberry, raspberry, cream
Mark scheme
26Oct / Nov 2023 · Paper 11 · Q11Show mark scheme →
AProfit would be maximised at a price of $30.
BProfit would not change if the price rose from $20 to $30.
CRevenue would increase if the price was decreased from $40 to $30.
DRevenue would be maximised at a price of $40.
Mark scheme
27Oct / Nov 2023 · Paper 12 · Q8Show mark scheme →
A–2.0
B–0.5
C+0.5
D+2.0
Mark scheme
28Oct / Nov 2023 · Paper 13 · Q7Show mark scheme →
Ainferior good; income elasticity of demand for good X = –0.8
Binferior good; income elasticity of demand for good X = –1.2
Cnormal good; income elasticity of demand for good X = +0.9
Dnormal good; income elasticity of demand for good X = +1.5
Mark scheme
29Oct / Nov 2023 · Paper 13 · Q10Show mark scheme →
Arises by 30% / falls
Brises by 30% / rises
Crises by 60% / falls
Drises by 60% / rises
Mark scheme
30Oct / Nov 2023 · Paper 13 · Q12Show mark scheme →
A–0.60
B–0.02
C+0.02
D+0.60
Mark scheme
31May / June 2023 · Paper 11 · Q5Show mark scheme →
A–2.0 weak complements
B–0.5 weak substitutes
C+0.5 weak substitutes
D+2.0 strong complements
Mark scheme
32May / June 2023 · Paper 11 · Q9Show mark scheme →
AThe quantity demanded responds to a change in price.
BAn increase in price brings about a decrease in the quantity demanded.
CAn increase in price induces consumers to spend more on the product.
DA decrease in price brings about an increase in revenue.
Mark scheme
33May / June 2023 · Paper 12 · Q8Show mark scheme →
A20 to 21
B30 to 33
C40 to 45
D50 to 60
Mark scheme
34May / June 2023 · Paper 12 · Q14Show mark scheme →
A–1
B–0.5
Czero
Dinfinity
Mark scheme
35May / June 2023 · Paper 12 · Q15Show mark scheme →
AW, Y and Z
BW and Z only
CW only
DZ only
Mark scheme
36May / June 2023 · Paper 13 · Q5Show mark scheme →
AA large percentage of income is spent on the product.
BIt is measured in the short run.
CIt is a necessity product.
DThere are few substitutes available.
Mark scheme
37May / June 2023 · Paper 13 · Q10Show mark scheme →
Aelastic
Binfinite
Cunitary
Dzero
Mark scheme
38May / June 2023 · Paper 13 · Q11Show mark scheme →
AFor biscuits it is greater than 1.
BFor biscuits it is zero.
CFor coffee it is less than 1.
DFor coffee it is unitary.
Mark scheme
39Feb / March 2023 · Paper 12 · Q8Show mark scheme →
Acheaper seats: elastic; more expensive seats: elastic
Bcheaper seats: elastic; more expensive seats: inelastic
Ccheaper seats: inelastic; more expensive seats: elastic
Dcheaper seats: inelastic; more expensive seats: unitary elasticity
Mark scheme
40Oct / Nov 2022 · Paper 11 · Q8Show mark scheme →
Abiscuits and cakes
Bcoffee and hot chocolate
Ccups and saucers
Dsugar and milk
Mark scheme
41Oct / Nov 2022 · Paper 12 · Q6Show mark scheme →
Adecreases, elastic
Bdecreases, inelastic
Cincreases, elastic
Dincreases, inelastic
Mark scheme
42Oct / Nov 2022 · Paper 12 · Q14Show mark scheme →
ARestaurant owners will receive more income.
BLee will spend more money on both products.
CYim will spend more money on both products.
DCinema owners will receive less income.
Mark scheme
43Oct / Nov 2022 · Paper 13 · Q8Show mark scheme →
A1, 2
B2, 3
C3, 1
D3, 2
Mark scheme
44Oct / Nov 2022 · Paper 13 · Q12Show mark scheme →
Aprice rises by 0%, quantity demanded falls by 10%
Bprice rises by 5%, quantity demanded falls by 5%
Cprice rises by 10%, quantity demanded falls by 5%
Dprice rises by 10%, quantity demanded falls by 0%
Mark scheme
45Oct / Nov 2022 · Paper 13 · Q16Show mark scheme →
A< 1 ; < 1
B< 1 ; > 1
C> 1 ; < 1
D> 1 ; > 1
Mark scheme
46May / June 2022 · Paper 11 · Q5Show mark scheme →
AThe good is an inferior good.
BThe rise in price was due to an increase in demand for the good.
CThe supply of the good was inadequate to meet the demand.
DThe supply of the good was price-inelastic.
Mark scheme
47May / June 2022 · Paper 11 · Q13Show mark scheme →
AIts price will be sensitive to changes in prices of close substitutes.
BIts price will be sensitive to changes in quantity demanded of close substitutes.
CThe quantity demanded for this good will be sensitive to changes in prices of close substitutes.
DThe quantity demanded for this good will be sensitive to changes in quantity demanded of close substitutes.
Mark scheme
48May / June 2022 · Paper 12 · Q9Show mark scheme →
Ato provide retail statistics for the government
Bto predict the change in its total revenue after it raises prices
Cto calculate the firm's competitive position
Dto enable the firm to complete consumer satisfaction surveys
Mark scheme
49May / June 2022 · Paper 12 · Q10Show mark scheme →
AS and P are complements; P and R are substitutes.
BS and P are complements; R is an inferior good.
CS and P are substitutes; P and R are complements.
DS and P are substitutes; R is an inferior good.
Mark scheme
50May / June 2022 · Paper 13 · Q13Show mark scheme →
AW to X
BX to W
CY to Z
DZ to Y
Mark scheme
51May / June 2022 · Paper 14 · Q9Show mark scheme →
Adistance of flight: long; purpose of flight: business; income of traveller: high
Bdistance of flight: long; purpose of flight: leisure; income of traveller: low
Cdistance of flight: short; purpose of flight: business; income of traveller: low
Ddistance of flight: short; purpose of flight: leisure; income of traveller: high
Mark scheme
52May / June 2022 · Paper 14 · Q11Show mark scheme →
Arises by a greater percentage than the price fall / falls
Brises by a greater percentage than the price fall / rises
Crises by a smaller percentage than the price fall / falls
Drises by a smaller percentage than the price fall / rises
Mark scheme
53May / June 2022 · Paper 14 · Q12Show mark scheme →
Aprice elasticity of demand for good X > 1; cross-elasticity of demand for good Y with respect to the price of good X > 0
Bprice elasticity of demand for good X > 1; cross-elasticity of demand for good Y with respect to the price of good X < 0
Cprice elasticity of demand for good X < 1; cross-elasticity of demand for good Y with respect to the price of good X > 0
Dprice elasticity of demand for good X < 1; cross-elasticity of demand for good Y with respect to the price of good X < 0
Mark scheme
54Feb / March 2022 · Paper 12 · Q8Show mark scheme →
Athe change in the demand for X divided by the change in the price of Y
Bthe change in the price of X divided by the change in the demand for Y
Cthe percentage change in the demand for X divided by the percentage change in the price of Y
Dthe percentage change in the demand for Y divided by the percentage change in the price of X
Mark scheme
55Oct / Nov 2021 · Paper 11 · Q6Show mark scheme →
A–1
Bzero
C+1
Dinfinite
Mark scheme
56Oct / Nov 2021 · Paper 11 · Q7Show mark scheme →
Aa change in real income as a result of a change in the price of consumer goods
Ba change in the demand for a good in response to a change in the price of a complement
Ca change in the price of a good in response to a change in the demand for a substitute
Da change in the price of a good when the demand for it changes
Mark scheme
57Oct / Nov 2021 · Paper 11 · Q13Show mark scheme →
AIt is a normal good with income elastic demand.
BIt is a normal good with income inelastic demand.
CIt is an inferior good with income elastic demand.
DIt is an inferior good with income inelastic demand.
Mark scheme
58Oct / Nov 2021 · Paper 12 · Q11Show mark scheme →
AY is a complement for X; Z is a complement for X
BY is a complement for X; Z is a substitute for X
CY is a substitute for X; Z is a complement for X
DY is a substitute for X; Z is a substitute for X
Mark scheme
59Oct / Nov 2021 · Paper 12 · Q18Show mark scheme →
Ahigh price elasticity of demand, high price elasticity of supply
Bhigh price elasticity of demand, low price elasticity of supply
Clow price elasticity of demand, high price elasticity of supply
Dlow price elasticity of demand, low price elasticity of supply
Mark scheme
60Oct / Nov 2021 · Paper 13 · Q10Show mark scheme →
A0.2
B0.4
C2.5
D5.0
Mark scheme
61Oct / Nov 2021 · Paper 13 · Q13Show mark scheme →
AS and P are complements; P and R are substitutes.
BS and P are complements; R is an inferior good.
CS and P are substitutes; P and R are complements.
DS and P are substitutes; R is an inferior good.
Mark scheme
62Oct / Nov 2021 · Paper 31 · Q10Show mark scheme →
Ahigh income elasticity of demand, high price elasticity of demand
Bhigh income elasticity of demand, low price elasticity of demand
Clow income elasticity of demand, high price elasticity of demand
Dlow income elasticity of demand, low price elasticity of demand
Mark scheme
63May / June 2021 · Paper 11 · Q8Show mark scheme →
ACoffee in general takes up a higher proportion of consumers’ income.
BConsumers may be very loyal to a particular brand of coffee.
CThere are more substitutes for a particular brand of coffee than for coffee in general.
DTotal demand for coffee is higher than for any one brand.
Mark scheme
64May / June 2021 · Paper 11 · Q10Show mark scheme →
AIt will decrease by 2%.
BIt will decrease by 12.5%.
CIt will increase by 2%.
DIt will increase by 12.5%.
Mark scheme
65May / June 2021 · Paper 12 · Q6Show mark scheme →
AA percentage increase in price will cause demand to fall by a larger percentage.
BA percentage increase in price will cause demand to increase by the same percentage.
CQuantity demanded will always be the same whatever the price.
DThe firm's revenue will always be the same whatever the price.
Mark scheme
66May / June 2021 · Paper 12 · Q8Show mark scheme →
Aan excess demand of 10 units
Ban excess demand of 30 units
Can excess supply of 20 units
Dan excess supply of 30 units
Mark scheme
67May / June 2021 · Paper 12 · Q13Show mark scheme →
Aprice elasticity of demand ✓, cross elasticity of demand ✓, income elasticity of demand ✓
Bprice elasticity of demand ✓, cross elasticity of demand ✓, income elasticity of demand ✗
Cprice elasticity of demand ✓, cross elasticity of demand ✗, income elasticity of demand ✓
Dprice elasticity of demand ✗, cross elasticity of demand ✓, income elasticity of demand ✓
Mark scheme
68Feb / March 2021 · Paper 12 · Q13Show mark scheme →
A\frac{\text{change in price}}{\text{change in quantity demanded}}
B\frac{\text{change in quantity demanded}}{\text{change in price}}
C\frac{\text{percentage change in price}}{\text{percentage change in quantity demanded}}
D\frac{\text{percentage change in quantity demanded}}{\text{percentage change in price}}
Mark scheme