GCSE Economics Revision: Elasticity (With Mock Questions!)
👋 Hello, economics champs!
Ready to ace your exams? Today we’re going to dive into Elasticity, a super important topic in GCSE Economics. It’s one of those areas that seems tricky at first, but trust me, once you get the hang of it, you’ll be all set for the exam!
What Is Elasticity?
Elasticity measures how much the quantity demanded or supplied of a good changes when there’s a change in its price or other factors (like income). Understanding elasticity helps explain how consumers and producers respond to price changes and is a vital part of any economist's toolkit.
In this section, you’ll learn about Price Elasticity of Demand (PED), Price Elasticity of Supply (PES), and Income Elasticity of Demand (YED). These are key concepts for GCSE Economics, so let’s get you feeling confident with them!
Key Learning Items:
🧠 Price Elasticity of Demand (PED): This measures how responsive the quantity demanded of a good is to a change in its price. A product with high elasticity will see a big change in demand when prices shift. For example, luxury items like designer clothes are highly elastic, while basic needs like bread are less elastic.
🧠 Price Elasticity of Supply (PES): This looks at how responsive the supply of a good is to a change in price. If it’s easy for producers to ramp up production when prices rise, supply is elastic. If it’s difficult, it’s inelastic.
🧠 Income Elasticity of Demand (YED): This measures how demand changes when consumers’ incomes change. For example, demand for normal goods increases with income, while demand for inferior goods falls as people earn more.
What You Need to Show in the Exam:
When tackling Elasticity questions in your GCSE Economics exam, you'll need to:
-
Define each type of elasticity clearly, showing you understand what PED, PES, and YED are.
-
Calculate elasticity using the formulas for PED, PES, and YED. Be comfortable rearranging these formulas, as questions often test your ability to work out missing values.
-
Explain the factors that influence elasticity. For example, you’ll need to describe how availability of substitutes affects PED or how time influences PES.
-
Apply your understanding to real-world situations. Can you explain why a certain product might have high or low elasticity? Why does this matter to businesses and governments? Be prepared to discuss this!
Things to Remember Before the Exam:
🤓 Know your formulas! Make sure you can quickly recall and use the formula for each type of elasticity. Practice calculating them to ensure you're ready.
🤓 Examples help! Be ready to give real-life examples of products with high or low elasticity. Think about how the price of petrol affects demand or why housing might have inelastic supply.
🤓 Graphs are your friend! Elasticity is often shown on a graph. Understand how to draw and interpret demand and supply curves for elastic and inelastic products.
🤓 Stay calm! You’ve done the hard work, now it’s just about showing what you know. Practice a few questions each day leading up to the exam to keep it fresh in your mind.
Mock Multiple Choice Questions!
Here are some practice questions to test your understanding of elasticity:
Q1 - What does a price elasticity of demand (PED) greater than 1 indicate?
a) Demand is elastic
b) Demand is inelastic
c) Demand is perfectly elastic
d) Demand is unitary
Q2 - Which of the following is most likely to have an inelastic supply?
a) Fresh strawberries
b) Handmade furniture
c) Factory-produced clothing
d) Bottled water
Q3 - Which of the following factors would make the demand for a product more elastic?
a) The product has many substitutes
b) The product is a necessity
c) The product is addictive
d) The product has few substitutes
Q4 - If the income elasticity of demand (YED) for a product is negative, what type of good is it?
a) Normal good
b) Inferior good
c) Luxury good
d) Complementary good
Q5 - A PES value of 0 means what for supply?
a) Supply is perfectly elastic
b) Supply is perfectly inelastic
c) Supply is unitary elastic
d) Supply is elastic
To check your answers and see more questions check out our GCSE Economics Multiple-Choice booklet, with 250 sample questions and answers for you to revise
Good luck with your revision, you’ve got this! 💪 If you keep practicing, you’ll be well-prepared to tackle anything that comes your way on exam day. Keep going!