Paper 3 question market structures (responses)

IB Economics: Paper 3 question market structures (responses)

1. A bakery finds that when they increase the price of bread from $5 to $10, quantity demanded falls from 50m loaves sold to just 40m.(a) (i) Calculate the price elasticity of demand when price increases from $5 to $10. [2 marks]PED = % change in QD = 20 / % change in price = 100 = 0.2.(b) Explain why the price elasticity of demand for a linear demand curve is not constant. [3 marks]

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