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Price elasticity of demand for potatoes.
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Potato exam question (a) (i) The price elasticity of demand is a measure of how responsive demand for a product is to the changes in its price. From the passage it is suggested that the PED for potatoes is inelastic, meaning that consumers are not very responsive to price change in potatoes. "The price to us this year is 2p a pound but the housewife is still paying 10, 12 or even 15p a pound." This means that if the PED value was calculated the figure would be less than 1, as the percentage change in price would be greater than percentage change in demand, which means that consumers are insensitive to price change in necessity goods. If a PED curve were to be drawn it would be steep. (ii) The price elasticity of supply is a measure of how responsive supply for a product is to the changes in its price. From the...
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