ECONOMICS 7136 PAPER 1 AND PAPER 2 BUNDLE 2026 REVISION QUESTIONS AND ANSWERS

ECONOMICS 7136 PAPER 1 AND PAPER 2
BUNDLE 2026 REVISION QUESTIONS AND
ANSWERS


◉ Price Elasticity of Demand (definition). Answer: the ratio of
percent change in quantity demanded to the percent change in the
price


◉ Price Elasticity of Demand (equation). Answer: (% change in Qd)
/ (% change in $)


◉ % change in Qd (equation). Answer: (change in Qd / initial Qd) x
100


◉ % change in $ (equation). Answer: (change in $ / Initial $) x 100


◉ Perfectly Elastic (definition). Answer: PED/S=Infinity; at one price
one consumes/produces infinite quantities


◉ Perfectly Inelastic (definiton). Answer: PED/S=0; at one quantity
one consumers/produces at multiple prices

, ◉ Unitary Elastic (definiton). Answer: PED/S=1; the percent change
in quantity and price are the same


◉ Relatively Elastic (definiton). Answer: PED/S>1; the quantity has
a larger percent change than price


◉ Relatively Inelastic (definiton). Answer: PED/S<1; the price has a
larger percent change than price


◉ Total Revenue (equation). Answer: Price x Quantity sold


◉ Price Effect (definiton). Answer: With a price increase each unit's
price increases which raises revenue.


◉ Quantity Effect. Answer: With a price increase fewer units are sold
which lowers revenue.


◉ The order of elasticity (most to least). Answer: 1. Perfectly
inelastic (0)
2. Relatively inelastic (<1)
3. Unitary Elastic (1)
4. Relatively Elastic (>1)
5. Perfect Elastic (infinite)