A market analyst estimates the elasticities of demand for OatPro, a premium plant-based milk brand:
| Elasticity Measure | Value |
|---|---|
| Price elasticity of demand (PED) | -1.4 |
| Income elasticity of demand (YED) | +1.8 |
| Cross elasticity of demand (XED) with respect to dairy milk price | +0.6 |
Which one of the following can be inferred from the table?
A 5% decrease in the price of OatPro would lead to a 7% increase in the quantity demanded.
OatPro is an inferior good with income-elastic demand.
A 15% increase in the price of dairy milk would lead to a 9% decrease in the demand for OatPro.
The demand for OatPro is price inelastic, making it highly unresponsive to price changes.
119 exam-style questions on Edexcel A A Level Economics 1.2.3 Price, income and cross elasticities of demand. Each one has a worked solution and a mark scheme showing where the marks go.