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Price elasticity of demand question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Price elasticity of demand question

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 6, 2023 at 10:45 am #678428
    guyver101
    Participant
    • Topics: 33
    • Replies: 28
    • ☆☆

    Hi, I keep going around in circles with this one.

    Question: If PED = 1, indicate if the statement is T/F
    “Total Expenditure will remain constant despite price changes”

    I put false, BPP book said true.

    The way I got False:
    For PED = 1, (using an example) a 10% increase in price would cause a 10% decrease in demand.

    A decrease in demand would decrease variable costs.

    I can see how a PED of 0 would lead to no change in expenditure, but not PED =1.

    Thanks

    February 6, 2023 at 4:35 pm #678441
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    You are correct, and the BPP answer is wrong!

    February 6, 2023 at 4:41 pm #678444
    guyver101
    Participant
    • Topics: 33
    • Replies: 28
    • ☆☆

    Thanks. I’ll send an erratum via their platform

    February 7, 2023 at 7:27 am #678457
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    Great 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Price elasticity of demand question’ is closed to new replies.

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