2019 May (PED) Paper 1 HL

 2019 May (PED) Paper 1 HL

2. (a) Explain why the price elasticity of demand (PED) varies along the length of a straight-line demand curve.

 

Definitions

PED – a measure of the responsiveness of the quantity demanded to a change in the price along a given demand curve.

 

Demand Curve – a graph showing the demand for a commodity changes with a change in its price.

 

Graph/Diagram

 

Demand is price elastic in the upper sections of any linear demand curve and price inelastic in the lower half. It will be unit elastic at the midpoint.

Explanation

 

When the price is greater for a commodity the PED for that good will be greater than 1 and will be called elastic meaning that as the price increases by a percentage the quantity demanded will decrease by a greater percentage. If the price is low for the commodity the PED for the good will be relatively inelastic implying that as the price increases the quantity demanded of the good will fall by a smaller percentage than the price increase.

Example

A good example using a demand schedule, curve and actually calculating the PED change would be helpful to show what you know.

Go to the link below from 2015 paper 3 HL

https://econowaughib.blogspot.com/2020/07/2015-ped-paper-3-hl.html