Question 1

AgriCorp produces a staple grain that forms the primary diet for a large region. Recently, AgriCorp increased the price of this grain by 15%. Consequently, the quantity demanded fell by only 3%.

Which of the following economic terms best describes the price elasticity of demand for AgriCorp's grain?

Accepted Answer

Compare the percentage change in demand to the percentage change in price. If demand changes less than price, it is inelastic.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Confusing elastic and inelastic. Remember: inelastic means demand doesn't stretch (change) much.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA BT — Business & Technology Practice Exam 5

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