Name ____________________

11 ATAR Economics
Price Elasticity of Demand – Worksheet 1

1. Define price elasticity of demand.

2. Explain the difference between elastic and inelastic demand.

3. If price elasticity of demand is 0.4, what does that indicate?

4. What is the formula for measuring price elasticity of demand?

5. Would the demand for alcohol be elastic or inelastic? Explain why.

6. Would the demand for orange juice be elastic or inelastic? Explain why.
7. What is the midpoint method for measuring elasticity?

8. Draw a perfectly elastic demand curve.

9. Draw a relatively inelastic demand curve.

10. Explain the following statement: If all petrol stations increased their petrol prices by 10%, demand would be
inelastic. But if BP was the only company to increase their prices by 10%, its demand would be elastic.