Credit Sprint / Practice problems / Price elasticity of demand

Price elasticity of demand practice problems

Marketing Unit 8. Try each one, then open the worked solution. The Credit Sprint app generates unlimited new versions with fresh numbers.

Problem 1.

A 20% increase in price causes quantity demanded to fall by 40%. What is the price elasticity of demand? (Give the absolute value.)

Show solution

Elasticity = %ΔQ ÷ %ΔP = 40 ÷ 20 = 2. Greater than 1, so demand is elastic.

Problem 2.

A 20% increase in price causes quantity demanded to fall by 10%. What is the price elasticity of demand? (Give the absolute value.)

Show solution

Elasticity = %ΔQ ÷ %ΔP = 10 ÷ 20 = 0.5. Less than 1, so demand is inelastic.

Problem 3.

A 10% increase in price causes quantity demanded to fall by 30%. What is the price elasticity of demand? (Give the absolute value.)

Show solution

Elasticity = %ΔQ ÷ %ΔP = 30 ÷ 10 = 3. Greater than 1, so demand is elastic.

Problem 4.

A 20% increase in price causes quantity demanded to fall by 40%. What is the price elasticity of demand? (Give the absolute value.)

Show solution

Elasticity = %ΔQ ÷ %ΔP = 40 ÷ 20 = 2. Greater than 1, so demand is elastic.

Problem 5.

A 20% increase in price causes quantity demanded to fall by 40%. What is the price elasticity of demand? (Give the absolute value.)

Show solution

Elasticity = %ΔQ ÷ %ΔP = 40 ÷ 20 = 2. Greater than 1, so demand is elastic.

Problem 6.

A 5% increase in price causes quantity demanded to fall by 15%. What is the price elasticity of demand? (Give the absolute value.)

Show solution

Elasticity = %ΔQ ÷ %ΔP = 15 ÷ 5 = 3. Greater than 1, so demand is elastic.