The table below shows elasticity estimates for organic coffee beans:
| Elasticity Measure | Value |
|---|---|
| Price elasticity of demand (PED) | -1.4 |
| Income elasticity of demand (YED) | +0.85 |
| Cross elasticity of demand (XED) with respect to the price of oat milk | -0.6 |
Which one of the following can be inferred from the table?
A 5%5\%5% decrease in the price of organic coffee beans would cause a 7%7\%7% decrease in the quantity demanded.
Organic coffee beans and oat milk are substitute goods, and a 10%10\%10% increase in the price of oat milk would lead to a 6%6\%6% fall in the demand for organic coffee beans.
The demand for organic coffee beans is price elastic, and they are classified as a normal good.
Organic coffee beans are a luxury good, and a 2%2\%2% increase in consumer incomes would lead to a 1.7%1.7\%1.7% fall in their demand.
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.