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IB Economics: Demand Elasticity – Practice Paper 1 (10 Questions)
IB Economics: Demand Elasticity – Practice Paper 1 (10 Questions)
Paper 1 drills the three elasticities: price, income and cross, then links them to total revenue and pricing decisions. Ten items with answers and a one-line note each.
Quick answer Elasticity is built from percentage changes: ten to twelve dollars with one hundred to eighty units gives minus one, while twenty to sixteen with fifty to seventy gives minus two. Total revenue, a linear demand and an income effect follow.
01 Paper details (check answers afterwards)
| Item | Detail |
|---|---|
| Questions | 10 questions |
| Suggested time | 25 minutes |
| Difficulty mix | Foundation 4 · Intermediate 3 · Challenge 2 · Error redo 1 |
| Chapter | Chapter: IB Economics: Demand Elasticity – Tutor Lesson Plan |
| Level | IB SL |
02 Questions (10 items)
- FoundationPrice rises from ten to twelve dollars and quantity falls from one hundred to eighty. Using the original values as the base, find the price elasticity of demand.
- FoundationPrice falls from twenty to sixteen dollars and quantity rises from fifty to seventy. Find the elasticity.
- FoundationFor the second question, find total revenue before and after the price cut, and the change.
- FoundationIncome rises from one thousand to one thousand one hundred dollars and quantity rises from two hundred to two hundred and forty. Find the income elasticity and classify the good.
- IntermediateThe price of good B rises five per cent and the quantity of good A falls fifteen per cent. Find the cross elasticity and the relationship.
- IntermediateA good has an elasticity of two. If price rises ten per cent, how much does quantity change and what happens to total revenue?
- IntermediateDemand is linear: at a price of ten the quantity is one hundred and at twelve it is eighty. What price gives sales of seventy-five?
- ChallengeA recession cuts income from one thousand to nine hundred dollars and demand falls from two hundred and forty to two hundred and sixteen. Find the income elasticity and the type of good.
- ChallengeA good has an elasticity of zero point five. Price rises from ten to twelve dollars from a base of one hundred units. Find the new quantity and the change in total revenue.
- Error redoA student divides a change in quantity of minus twenty by a price change of two and calls the answer minus ten. Give the correct value and the mistake.
03 Answers and one-line notes
| # | Answer | One-line note |
|---|---|---|
| 1 | the elasticity is minus one, unit elastic | Quantity falls twenty per cent and price rises twenty per cent, so the ratio is minus one. |
| 2 | the elasticity is minus two, elastic | Quantity rises forty per cent against a twenty per cent price fall, giving minus two. |
| 3 | one thousand dollars, then one thousand one hundred and twenty, a rise of one hundred and twenty | Twenty times fifty is one thousand and sixteen times seventy is one thousand one hundred and twenty. |
| 4 | the income elasticity is plus two, a normal luxury good | Quantity rises twenty per cent against ten per cent income growth, so the good is a luxury. |
| 5 | the cross elasticity is minus three, so they are complements | A negative sign means the two goods are used together. |
| 6 | quantity falls twenty per cent and total revenue falls | With elastic demand the quantity loss outweighs the price gain, so revenue falls. |
| 7 | twelve dollars and fifty cents | Each two-dollar rise costs twenty units, so seventy-five units needs twelve fifty. |
| 8 | the income elasticity is plus one, a normal necessity | Both fall ten per cent, so the elasticity is one and the good is a normal necessity. |
| 9 | ninety units, with revenue rising from one thousand to one thousand and eighty | Price rises twenty per cent but quantity only ten, so revenue rises by eighty dollars. |
| 10 | the elasticity is minus one; the student forgot to divide by the original price and quantity | Elasticity uses percentage changes, so twenty over one hundred divided by two over ten is minus one. |
04 What to do after marking
- After marking, redo only the wrong items and write down which step went wrong (formula, unit, or misread number).
- Repeat the same item two days later; move to the next paper only when both attempts are correct.
- Parents only need the answer and note columns; there is no need to explain every item.
Questions and answers are written originally by the TutorZone team and are not taken from any school, publisher or examination authority paper. Every value is checked by computer.
