CAIE A-Level Business 8.1.1 Elasticity
Practise PED, YED and promotional elasticity calculations, then use the results to judge pricing, promotion and sales forecasts.
- Syllabus
- 2026–2028
- Course
- Business 9609
- Level
- A2
Exam points
- calculate PED, YED or PrED from percentage changes in price, income or promotion
- use elasticity values to predict revenue, demand or sales changes from case data
- evaluate limits of elasticity when choosing a marketing mix or sales forecast
8.1.1—Elasticity question 1
[Maximum number: 1]
Refer to lines 57 to 58 and assume no other changes. Calculate the forecast percentage change in sales for 2025 if average incomes increase by 1.5%.
The market research has allowed HP to estimate the income elasticity of demand for organic pet food as +2.
If average incomes go up by 1.5%, then demand will increase by 1.5×2=3%(1)
Note: \% not needed for full marks.
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