O-LevelEconomicsThe allocation of resources2281/12 · Oct/Nov 2023 · Q81 Mark

The owner of a hotel in Malaysia finds that the price elasticity of demand (PED) for accommodation in the area is –1.7. If the hotel owner decreases the price of a room by 5%, how would the demand for a room change?

AIt would decrease by 2.9%.

BIt would decrease by 8.5%.

CIt would increase by 2.9%.

DIt would increase by 8.5%.

✓ Correct answer

D: It would increase by 8.5%.

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, Oct/Nov 2023 Paper 1 Variant 2, question 8.

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