Product X has a price elasticity of demand (PED) of – 3.0. Product Y has a PED of – 0.2.
Which combination of characteristics is correct?
Select ONE answer:
Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple choice question is suitable for Economics KS5 classes.
The answer is 3
- An equal shift to the left of the demand and supply curves will leave the equilibrium price unchanged.
- An equal shift to the left of the demand and supply curves will reduce the quantity traded.
- Correct: A decrease in supply on its own will push up the price but this would be offset by the downward pressure on the price resulting from a decrease in demand. Both lower supply and lower demand will reduce the quantity traded.
- If less is supplied and demand there will fewer products bought and sold.
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