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The price of tea in the UK increased from £7.20 per kilo to £8.48 per kilo. Over the same period the quantity of tea purchased fell from 97 million kilos to 76 million kilos. Calculate the price elasticity of demand for tea.

Price elasticity of demand = change in demand / change in price change in price = 7.20 --> 8.48 = 17.78% increasechange in demand = 97 million --> 76 million kilos = 21.6% decrease therefore PED = -21....
WH
Answered by William H. • Economics tutor
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What is the basic Economic problem, and how does Economics as a discipline approach this?

The basic economic problem is usually defined as there being a situation of scarce resources but an unlimited or infinite number of wants and demands for these resources. Economics as a discipline seeks to a...
AM
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Why do rising house prices cause an increase in aggregate demand?

An increase in house prices will increase the wealth of house owners. Knowing that their asset is worth more, house owners will have more confidence to borrow, spend and take risks, this is known as the weal...
AH
Answered by Arthur H. • Economics tutor
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In what way does a central bank increase the money supply in an economy?

In general, modern central banks such as the ECB or BoE tend to use interest rate targeting as a way of tightening or loosening monetary policy, however occasionally the money supply is manipulated instead. ...
ER
Answered by Edward R. • Economics tutor
2782 Views

What is the effect on price and quantity on flight tickets when the oil price has increased.

When oil price increased, the cost of production for plane company increase and supply will shift left. When supply sift left the price will increase and quantity will decrease.
ML
Answered by Max L. • Economics tutor
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