Pearson Edexcel International GCSE Economics: Price, supply and income elasticity (4EC1) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 1.1.4 (statements a to s) of the Pearson Edexcel International GCSE Economics (4EC1) specification, Issue 3, February 2026. The subject is not tiered. Prepare with the study guide or the revision notes. Other links: the Edexcel IGCSE Economics hub, the printable checklist and the free diagnostics. All firms, countries and figures are invented, with prices in made-up currency units. Show your working on every calculation.

Questions

1. What is meant by price elasticity of demand? [2]

2. A bookshop raises the price of a diary from 12 to 15. Weekly sales fall from 480 to 432. Calculate the price elasticity of demand. [3]

3. State the name for demand or supply with each of these values (ignore sign): (a) 0, (b) 0.7, (c) 1, (d) 2.4, (e) infinity. [5]

4. A firm cuts the price of a gadget from 30 to 24. Sales rise from 200 to 220.

(a) Calculate the price elasticity of demand. [3] (b) Calculate the change in total revenue. [2] (c) State what your answers show about the demand. [1]

5. Explain two factors that make the demand for table salt price inelastic. [6]

6. A potter raises the price of a bowl from 50 to 55. The number supplied each week rises from 300 to 315.

(a) Calculate the price elasticity of supply. [3] (b) State whether supply is elastic or inelastic. [1] (c) Explain one reason why the potter’s supply may be this elastic. [2]

7. Describe how you would draw a diagram to show that supply of one good is more price elastic than supply of another. [4]

8. In Country D the price of tea leaves and the price of bicycles both rise by 10%. Explain why the quantity of bicycles supplied may rise by more than the quantity of tea leaves in the first year. [4]

9. In Country E household income rises by 8%. Demand for good X rises by 12%, good Y rises by 2.4% and good Z falls by 4%.

(a) Work out the income elasticity of demand of each good. [3] (b) Classify each good as luxury, normal or inferior. [3]

10. Country A plans a tax of 0.50 on a snack. The price is 4.00 and weekly sales are 20,000. The price rises by the full tax.

(a) Calculate the new weekly quantity and the tax revenue if PED is −0.8, and again if PED is −2.0. [4] (b) Explain which PED gives the government more revenue. [2]

11. A café chain sells luxury coffee (income elasticity +1.8) and plain bread rolls (income elasticity −0.4). Incomes are forecast to fall by 5%.

(a) Calculate the expected percentage change in sales of each product. [2] (b) Evaluate whether the chain should change its menu in response. [7]

Answers

1. It shows how strongly buyers respond [1] by changing the quantity they demand of a good when its price changes [1]. [2] Examiner insight: Give both parts of the definition, the idea of responsiveness and what it responds to. “How much people want a good” has neither.

2. Price change = (15 − 12) ÷ 12 × 100 = +25% [1]. Quantity change = (432 − 480) ÷ 480 × 100 = −10% [1]. PED = −10 ÷ 25 = −0.4 [1]. [3] Examiner insight: Write each percentage on its own line before dividing. The command word Calculate asks for working to be shown, so a bare answer is risky.

3. (a) Perfectly price inelastic [1]. (b) Price inelastic [1]. (c) Unitary [1]. (d) Price elastic [1]. (e) Perfectly price elastic [1]. [5] Examiner insight: Use the full names. “Elastic” alone does not separate perfectly elastic from elastic.

4. (a) Price change = −6 ÷ 30 × 100 = −20% [1]. Quantity change = +20 ÷ 200 × 100 = +10% [1]. PED = 10 ÷ −20 = −0.5 [1]. (b) Old revenue = 30 × 200 = 6,000 [1]. New revenue = 24 × 220 = 5,280, a fall of 720 [1]. (c) Revenue fell after a price cut, so demand is price inelastic [1]. [6] Examiner insight: In part (c) link the revenue result to the type of demand. The two answers should agree with each other.

5. Any two, each with a statement and two linked expansions: Necessity [1]: salt is needed for cooking and food storage [1], so buyers keep buying when the price rises and quantity falls by a small percentage [1]. Small share of income [1]: a packet costs very little compared with income [1], so buyers barely react to a rise in price [1]. (Also accept few close substitutes, with a linked explanation.) [6] Examiner insight: Each factor needs a chain: factor, why it matters here, what happens to quantity. A list of factor names with no context is a weak answer.

6. (a) Price change = 5 ÷ 50 × 100 = +10% [1]. Quantity change = 15 ÷ 300 × 100 = +5% [1]. PES = 5 ÷ 10 = 0.5 [1]. (b) Inelastic, because PES is below 1 [1]. (c) A potter has limited spare capacity or a single kiln [1], so output cannot rise quickly even when the price is higher [1]. [6] Examiner insight: Keep PES positive. A negative PES in the working suggests demand and supply have been confused.

7. Name the two axes, price upwards and quantity across [1]. Draw two upward-sloping supply curves through the same starting point [1]. Label the flatter curve as the more elastic supply and the steeper as the more inelastic [1]. Mark the same price rise on both to show quantity supplied rising by more along the flatter curve [1]. [4] Examiner insight: Say what each curve represents. A diagram with unlabelled curves is hard to credit.

8. Bicycles are manufactured goods [1]. A factory can use spare capacity, hold stocks or add shifts [1], so output can rise within the year [1]. Tea bushes take time to grow, so tea supply is inelastic in the short run [1]. [4] Examiner insight: Compare the two products explicitly. Describing only bicycles does not answer why one rises by more.

9. (a) X: 12 ÷ 8 = +1.5 [1]. Y: 2.4 ÷ 8 = +0.3 [1]. Z: −4 ÷ 8 = −0.5 [1]. (b) X is a luxury good, since YED is above 1 [1]. Y is a normal good, since YED is between 0 and 1 [1]. Z is an inferior good, since YED is negative [1]. [6] Examiner insight: Support each label with the value. The sign is part of the answer for income elasticity.

10. (a) New price = 4.50, a rise of 12.5% [1]. PED −0.8: quantity falls 10% to 18,000 and revenue is 18,000 × 0.50 = 9,000 [1]. PED −2.0: quantity falls 25% to 15,000 [1] and revenue is 7,500 [1]. (b) PED −0.8, because demand is inelastic [1], so buyers cut their purchases proportionally less than the price rise, leaving more units to be taxed [1]. [6] Examiner insight: Compute the percentage fall in quantity before the new quantity. Revenue is tax per unit multiplied by units still sold.

11. (a) Coffee: 1.8 × −5 = −9% [1]. Rolls: −0.4 × −5 = +2% [1]. (b) Coffee is a luxury good, so sales fall by more than incomes [1]. Rolls are inferior, so sales rise [1]. The fall in coffee is larger than the rise in rolls [1], so total revenue is likely to fall unless rolls make up most of sales [1]. Estimates may be inaccurate or the fall in incomes may not happen [1]. Rolls may earn less profit per item than coffee, and a price cut on coffee could be tested [1]. Conclusion: keep coffee, add cheaper options, and track sales [1]. [9] Examiner insight: Evaluation needs a supported decision. Use the percentages and reach a conclusion rather than listing the elasticities.

Where marks are usually lost

• Taking the later figure, not the starting figure, as the base of a percentage change.
• Giving a PED value with no statement of whether demand is elastic or inelastic.
• Defining elasticity as “how much” without the idea of responsiveness.
• Writing a factor name with no link to quantity or to the product in the question.
• Describing a diagram without naming the axes and curves.
• Mixing up income elasticity labels, or dropping the minus sign for an inferior good.
• Treating a revenue rise after a price rise as a sign of elastic demand.
• Giving an evaluation with no conclusion.

Next steps

• Revisit the revision notes or re-read the study guide.
• Tick off statements on the printable checklist and browse the Edexcel IGCSE Economics hub.
• Try all free 10-minute diagnostics at /diagnostics/.
• Book a free trial class at /trial/.

Official syllabus

Source: Pearson Edexcel International GCSE in Economics (4EC1) specification, Issue 3, February 2026, published by Pearson Education Limited, section 1.1.4 Elasticity.