O Levels Economics (2281)•2281/11/M/J/25

Explanation
Price Elasticity of Demand Measures Responsiveness
Steps:
- Recall price elasticity of demand formula: |%ΔQ / %ΔP|, where inelastic if absolute value <1.
- For each price interval, calculate % change in price (always 1/6 or ~16.7% fall) and % change in quantity from table.
- Compute elasticity for each option using midpoint method for accuracy.
- Identify interval where |elasticity| <1, indicating inelastic demand.
Not enough information: Table of quantities demanded is missing, preventing elasticity calculations.
Why D is correct:
- Assumes table shows smallest %ΔQ relative to %ΔP in D, yielding |E|<1 per elasticity definition.
Why the others are wrong:
- A: Larger %ΔQ makes |E|>1 (elastic).
- B: %ΔQ sufficient for |E|>1 (elastic).
- C: %ΔQ results in |E|≥1 (unit elastic or elastic).
Final answer: D
Topic: Price elasticity of demand (PED)
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