Economics Practice Pack — PED & PES Calculations

Try these questions before flipping to see the answer

Percentage change in price when price rises from $RM10$ to $RM12$

$$\frac{2}{10} \times 100 = 20\%$$

Percentage change in quantity demanded when it falls from $100$ to $80$

$$\frac{20}{100} \times 100 = 20\%$$

Percentage change in quantity supplied when it rises from $200$ to $250$

$$\frac{50}{200} \times 100 = 25\%$$

Percentage change in price when price rises from $RM20$ to $RM25$

$$\frac{5}{20} \times 100 = 25\%$$

Price Elasticity of Demand (PED) when demand changes by $20\%$ and price changes by $10\%$

$\text{PED} = \frac{20\%}{10\%} = 2$ (Elastic, because $\text{PED} > 1$)

Price Elasticity of Demand (PED) when demand changes by $5\%$ and price changes by $10\%$

$\text{PED} = \frac{5\%}{10\%} = 0.5$ (Inelastic, because $\text{PED} < 1$)

Elasticity classification when demand changes by $15\%$ and price changes by $15\%$

Unit elastic, because $\text{PED} = \frac{15\%}{15\%} = 1$

Price Elasticity of Supply (PES) when supply changes by $30\%$ and price changes by $10\%$

$\text{PES} = \frac{30\%}{10\%} = 3$ (Elastic, because $\text{PES} > 1$)

Price Elasticity of Supply (PES) when supply changes by $5\%$ and price changes by $20\%$

$\text{PES} = \frac{5\%}{20\%} = 0.25$ (Inelastic, because $\text{PES} < 1$)

PED calculation when price rises from $RM10$ to $RM12$ and demand falls from $100$ to $70$

Price change = $20\%$, Demand change = $30\%$. $\text{PED} = \frac{30\%}{20\%} = 1.5$ (Elastic)

PES calculation when price rises from $RM20$ to $RM25$ and supply rises from $100$ to $150$

Price change = $25\%$, Supply change = $50\%$. $\text{PES} = \frac{50\%}{25\%} = 2$ (Elastic)