IB Economics HL 2.5.2 Price elasticity of demand calculations Question Bank

Practise IB Economics HL 2.5.2 by calculating price elasticity of demand and interpreting the result in context.

Exam points

Calculate PED from percentage changes or a demand dataset using the correct sign and method.
Interpret the magnitude of PED and link it to substitutes, necessity or time period.
Evaluate a price-change prediction using the calculated elasticity and stated assumptions.

[Maximum number: 3]

Using the data in Table 2, calculate the price elasticity of demand for European seabass following the change in price from 2017 to 2018.

P(2018)=33522 / 5587=6.00
$\mathrm{PED}=(\% \Delta \mathrm{Qd}) /(\% \Delta \mathrm{P})=24.05 /(-4.31)$

Marking guidance:

OFR applies if the price has been calculated incorrectly.
Any valid working (correct $\% \Delta Q d$ or $\% \Delta P$ , provided the formula is not inverted) is sufficient for [1].
=-5.58 OR 5.58

An answer of -5.58 or 5.58 without any valid working is sufficient for [2].

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2.5.2—Price elasticity of demand question 1