Ace your certifications with Practice Exams and AI assistance.

Browse Exams
For Educators
Blog

Privacy Policy
Terms of Service
Cookie Policy
Support

AWS SAA Exam Prep
PMI PMP Exam Prep
CPA Exam Prep
GCP PCA Exam Prep

Practice ACCA ACCA BT — Business & Technology Practice Exam 2Question 25

Medium2 marksMultiple Choice

Syllabus A: The business organisation and its external environmentSyllabus AMicroeconomicsElasticity

ACCA · Question 25 · Syllabus A: The business organisation and its external environment

[Section A] A city's public transport authority increases bus fares by 10%. Following this, they observe that passenger numbers drop by only 2%. Based on this data, how would an economist describe the Price Elasticity of Demand (PED) for bus travel in this city?

Answer options:

Perfectly elastic

Elastic

Unitary elastic

Inelastic

How to approach this question

Compare the percentage change in quantity demanded to the percentage change in price.

Full Answer

D.Inelastic✓ Correct

Price Elasticity of Demand measures how sensitive demand is to a change in price. If the % change in quantity demanded (2%) is less than the % change in price (10%), the PED is less than 1, which is termed 'inelastic'. This often happens with necessities like public transport where there are few alternatives.

Common mistakes

Confusing elastic and inelastic. Remember: Elastic = stretchy/responsive. Inelastic = rigid/unresponsive.

Question 24 All questions Question 26

Practice the full ACCA BT — Business & Technology Practice Exam 2

52 questions · hints · full answers · grading

More questions from this exam

Q01[Section A] A global non-governmental organization (NGO) providing clean water infrastructure in ...Medium Q02[Section A] 'NovaTech', a rapidly growing AI startup, was initially built around its charismatic ...Medium Q03[Section A] A multinational pharmaceutical company is implementing blockchain technology to track...Medium Q04[Section A] A newly assembled cross-border remote team of software developers is currently experi...Easy Q05[Section A] An emergency room administrator at a busy urban hospital uses the Urgent/Important ma...Medium

View all 52 questions →