Microeconomics

Table of Contents

1. Topic pack - Microeconomics - introduction
2. 1.1 Competitive Markets: Demand and Supply
3. 1.1 Competitive Markets: Demand and Supply - notes
4. 1.1 Competitive markets - questions
5. 1.1 Competitive markets - simulations and activities
6. 1.2 Elasticities
7. 1.2 Elasticities - notes
8. Section 1.2 Elasticities - questions
   1. PED - short-answer
   2. Price, income and cross elasticity - self-test questions
   3. PES - short answer
   4. Inflation soars for staple foods
   5. Elastic iPods
   6. DaVinci scandal exposes tacky Chinese nouveau tastes
   7. Keep on boating
   8. Coffee prices remain high
   9. SUV's - cross elastic?
   10. Oil Prices
   11. Scare tactics lift prices for smokers
9. Section 1.2 Elasticities - simulations and activities
10. 1.3 Government intervention
11. 1.3 Government Intervention - notes
12. 1.3 Government intervention - questions
13. 1.3 Government intervention - simulations and activities
14. 1.4 Market failure
15. 1.4 Market failure - notes
16. Section 1.4 Market failure - questions
17. Section 1.4 Market failure - simulations and activities
18. 1.5 Theory of the firm
19. 1.5 Theory of the firm - notes (HL only)
20. Section 1.5 Theory of the firm - questions
21. Section 1.5 Theory of the firm - simulations and activities
22. Print View

PED - short-answer

Question 1

'The demand for luxury cars is elastic, but the coefficient for Jaguar cars is higher than that for the luxury part of the car market as a whole'.

Why is this the case?

Question 2

'The price elasticity of demand for commuter rail travel is inelastic but that for vacation rail travel is elastic'. Comment on this fact.

Question 3

An exclusive pen manufacturer sells 4,000 pens per month at a price of £40 each. When the price is reduced to £30 sales increase to 6,000 pens per month.

(a) Calculate the price elasticity of demand for the pens over this price range.
(b) Is demand elastic, unit elastic or inelastic?
(c) Calculate the change in revenue due to the change in price.

Question 4

The table below shows the demand schedule for a good. Complete the following table, using the appropriate equation, with the total expenditure and indicate in the elasticity column whether the good is elastic or inelastic over that price range.