Business Studies Multiple Choice Question – 21 May 2021

A holiday company estimates that a 12% decrease in holiday prices would result in an 18% increase in demand for its low cost holidays.

The income elasticity of demand (YED) for low cost holidays is?

Select ONE answer:

1. – 0.67
2. + 0.67
3. +1.5
4. – 1.5

Show the workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Business Studies KS4 & KS5 classes

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Definition of YED e.g. the relationship between the change in quantity demanded and a change in income, the formula is % Change in Quantity Demanded / % Change in Income ==> + 18% / – 12% = – 1.5

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