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02:18Prompt
What is price elasticity of demand?
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02:18Answer shown
What is price elasticity of demand?
Responsiveness of quantity demanded to a change in price, calculated as percentage change in quantity demanded divided by percentage change in price.
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1.3 Demand
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1.4 Supply
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Question 4
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Short Answer6 marksLevel 4
Explain why a product with many close substitutes is likely to have more elastic demand.
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Your Answer
Demand is elastic when consumers can switch to alternatives easily, so a small price rise causes a larger fall in quantity demanded.
Explanation
Strong core definition and a relevant link to substitutes. To reach full marks, develop the causal chain with a clearer consequence for total revenue or consumer choice.
Strengths
Clear definition, correct concept, and an appropriate example of substitutes affecting elasticity.
Areas for Improvement
Add one more developed implication to show stronger causal depth and make the answer more exam-ready.
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Answer
Price elasticity of demand - 7 marks
Define price elasticity of demand as the responsiveness of quantity demanded to a change in price.
Explain that close substitutes make it easier for consumers to switch when price rises.
Link switching behaviour to a proportionally larger fall in quantity demanded.
Explanation
The mark scheme rewards both the definition and the reasoning. A complete answer needs to show why alternatives change consumer behaviour, then connect that behaviour to elasticity.
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