2.5Elasticity of demand
Calculate and interpret PED and YED, work backwards from an elasticity, link PED to total revenue and to the decisions of firms and governments, and draw the diagrams, including the Engel curve.
Level and scope checked against the Economics guide (course first assessed 2022; October 2022 update), pp. 20–21, 27–28, on 11 Nov 2026. AI-assisted check, not reviewed by a teacher.The topic table lists PED and YED, with HL-only treatment of PED along a linear demand curve, of primary commodities against manufactured products, and of applications of YED. Cross elasticity is not in the guide: IB Vault includes it only as a labelled optional extension.
1Learning objectives and review status
- Define elasticity and price elasticity of demand (PED), and calculate PED from data.
- Use a given PED to find a change in price, in quantity demanded or in total revenue.
- Classify demand across the range of PED values and draw each case.
- Explain how substitutes, necessity, the share of income and time determine PED.
- Explain the link between PED and total revenue with a diagram, and discuss why PED matters to firms and to governments.
- Define, calculate and interpret income elasticity of demand (YED), and show income-elastic, income-inelastic and inferior goods on an Engel curve.
HL extension
2HL learning objectives
- explain why PED changes along a straight-line demand curve and why it is lower for primary commodities than for manufactured products.
- discuss the importance of YED for firms and for changes in the sectoral structure of an economy.
3Elasticity and price elasticity of demand
measures how strongly one variable responds to a change in another. It is the percentage change in the variable that responds divided by the percentage change in the variable that caused the response. Because both parts are percentages, an elasticity has no units, so the responsiveness of demand for rice, measured in kilograms, can be compared with the responsiveness of demand for haircuts or cars.
The law of demand says that quantity demanded falls when price rises, ceteris paribus. It does not say by how much. answers that question: it measures the responsiveness of the quantity demanded of a good to a change in its own price, along a given demand curve.
- Formula: PED = % change in quantity demanded ÷ % change in price.
- Percentage change: (new value − old value) ÷ old value × 100.
Price and quantity demanded move in opposite directions, so PED is negative for a downward-sloping demand curve. Keep the minus sign in the working. To say how responsive demand is, use the size of the number (its absolute value) and ignore the sign: a PED of −1.5 is larger in size than a PED of −0.4, so demand is more responsive in the first case.
PED is a number, not a percentage. A PED of −1.5 means that a 1% rise in price leads to a 1.5% fall in quantity demanded. It describes a movement along the demand curve caused by a change in the good's own price. A change in income, in tastes or in the price of another good shifts the whole curve, and PED does not measure that.
Key terms
- Elasticity
- A unit-free measure of the responsiveness of one variable to a percentage change in another, other relevant influences held constant.
- Price elasticity of demand (PED)
- The percentage change in quantity demanded divided by the percentage change in the good's own price.
4Calculating PED and working backwards from it
Every calculation in this topic uses the same percentage-change formula, with the old (initial) value as the base: % change = (new value − old value) ÷ old value × 100. A fall gives a negative percentage. Work out the two percentage changes first, then divide the change in quantity by the change in price.
The formula can also be rearranged to find a change when the elasticity is known. Keep the minus sign of PED so that the direction comes out right: a price rise gives a fall in quantity, and a firm that wants to sell more must cut its price.
- % change in quantity demanded = PED × % change in price.
- % change in price = % change in quantity demanded ÷ PED.
- New value = old value × (1 + % change ÷ 100).
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5Degrees of PED and their diagrams
The size of PED can be anything from zero to infinity. This range is divided into five cases. The first and the last are theoretical limits; the demand for almost every real good lies between them.
| Size of PED | Name | If price rises by 10%, quantity demanded… | Demand curve |
|---|---|---|---|
| 0 | Perfectly inelastic | does not change | Vertical line |
| Between 0 and 1 | Relatively (price) inelastic | falls by less than 10% | Downward sloping; the steeper of two curves through one point |
| 1 | Unit elastic | falls by exactly 10% | A curve on which price × quantity is constant |
| Greater than 1 | Relatively (price) elastic | falls by more than 10% | Downward sloping; the flatter of two curves through one point |
| Infinite | Perfectly elastic | falls to zero | Horizontal line |
Demand is when the size of PED is between 0 and 1: quantity demanded changes by a smaller percentage than price. Demand is when the size of PED is greater than 1: quantity demanded changes by a larger percentage than price. At the two percentage changes are equal.
Steepness is only a guide. How steep a curve looks depends on the scales chosen for the axes, while PED compares percentage changes. Two curves can be compared by eye only when they are drawn on the same axes and through the same point: there, the flatter curve is the more elastic. In writing, justify 'elastic' or 'inelastic' by comparing the percentage changes, not by the slope.
The two limits and the middle case have demand curves of a fixed shape. Demand is (PED = 0) when the quantity demanded is the same at every price: the demand curve is vertical. Demand is (PED is infinite) when consumers will buy any quantity at the going price but nothing at any higher price: the demand curve is horizontal. A demand curve that is unit elastic at every point is a curve, not a straight line: a rectangular hyperbola, which bends toward both axes without touching them and on which price × quantity is the same at every point.
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Check your understanding
Key terms
- Price elastic
- A responsiveness greater than one in absolute value: quantity changes by a larger percentage than price.
- Price inelastic
- A responsiveness between zero and one in absolute value: quantity changes by a smaller percentage than price.
- Unit elasticity
- A responsiveness equal to one in absolute value: quantity and price change by the same percentage.
- Perfectly elastic
- Infinite responsiveness, shown by a horizontal curve: buyers purchase nothing at any higher price (demand), or sellers offer nothing at any lower price (supply).
- Perfectly inelastic
- Zero responsiveness represented by a vertical demand or supply curve.
6Determinants of price elasticity of demand
PED differs between goods, and for the same good between consumers, places and periods. Four determinants explain most of the difference. Each works by changing how easily consumers can respond when the price rises.
- Number and closeness of substitutes: the more a good has, and the closer they are, the more price elastic its demand, because consumers can switch to an alternative when its price rises. For this reason PED depends on how widely the good is defined. Demand for one brand of petrol is elastic, because other brands are almost identical; demand for petrol as a whole is inelastic, because a petrol car runs on nothing else.
- Degree of necessity: demand for necessities such as staple foods, medicines and electricity is price inelastic, because consumers need roughly the same quantity whatever the price. Demand for luxuries is more elastic, because consumers can go without. Goods that are habit-forming or addictive, such as cigarettes, behave like necessities for the people who use them.
- Proportion of income spent on the good: the larger the share of income a good takes, the more price elastic its demand. A 10% rise in the price of a car or a holiday is a noticeable sum, so buyers look for alternatives or postpone the purchase. A 10% rise in the price of salt or matches is hardly noticed, so the quantity bought barely changes.
- Time: demand becomes more price elastic the longer consumers have to respond. Just after a price rise, habits, equipment and contracts are fixed. Over months and years consumers find substitutes, change their habits and replace their equipment: after a lasting rise in fuel prices, drivers eventually buy smaller or electric cars.
The determinants act together and can pull in opposite directions: a good can be a necessity and still have elastic demand if several firms sell near-identical versions of it. A good can also be a necessity for one household and a luxury for another, so say which market, which consumers and which period a claim about PED refers to. Price itself is not a determinant. What matters is the share of income the good takes, so an expensive good is not automatically elastic and a cheap good is not automatically inelastic.
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7PED and total revenue
is the money a firm receives from its sales: TR = price × quantity sold. For a whole market it is also the amount consumers spend on the good. On a demand diagram, total revenue at any point on the curve is the area of the rectangle between that point and the two axes.
When price rises, two things happen to revenue at once. Each unit still sold brings in more, which is a gain. Fewer units are sold, which is a loss. PED shows which is larger, because it compares the percentage fall in quantity with the percentage rise in price.
- Price inelastic demand: a price rise causes a proportionately smaller fall in quantity demanded, so the gain outweighs the loss and total revenue rises. A price cut lowers total revenue.
- Price elastic demand: a price rise causes a proportionately larger fall in quantity demanded, so the loss outweighs the gain and total revenue falls. A price cut raises total revenue.
- Unit elastic demand: the two percentage changes are equal, so the gain and the loss cancel out and a small change in price leaves total revenue unchanged. On a demand curve that is unit elastic at every point, total revenue is the same at every price.
In short, price and total revenue move in the same direction when demand is price inelastic and in opposite directions when demand is price elastic.
A firm that knows its PED can therefore predict its revenue before it changes its price: it uses PED to find the new quantity, then multiplies by the new price.
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Key terms
- Total revenue
- Price multiplied by quantity sold; it changes with price according to the price elasticity of demand.
8Why PED matters to firms and governments
A firm that wants to raise its revenue needs to know the PED of its product. If demand is price inelastic it should raise its price; if demand is price elastic it should cut it. This is why discounts and promotions are common for goods with many close substitutes and rare for goods with none. Firms also try to make demand for their own product less elastic, through branding and advertising that persuade buyers that no close substitute exists, because that gives them more freedom to raise price.
PED also decides how much of a rise in costs a firm can pass on. When wages, raw materials or a tax raise its costs, a firm facing price-inelastic demand can raise its price with little loss of sales, so its customers pay most of the increase. A firm facing price-elastic demand loses many customers if it raises its price, so it has to absorb most of the increase in a lower profit margin.
Governments use PED when choosing which goods to tax. An raises the price consumers pay. If demand is price inelastic, quantity falls only a little, so the tax is collected on almost as many units as before and the revenue is large and predictable. This is why fuel, alcohol and tobacco are heavily taxed in many countries. If demand is price elastic, quantity falls sharply and the tax raises little.
The same PED decides who pays the tax and what it achieves. With price-inelastic demand most of the tax is passed on to consumers as a higher price; how the burden is shared between consumers and producers is the . If the good takes a larger share of a poor household's income than of a rich one's, the tax is regressive. And if the aim is to cut consumption of a harmful good, price-inelastic demand makes the tax a weak tool, because consumption falls by a smaller percentage than price rises. The same reasoning applies to a subsidy: by lowering price it raises consumption substantially only where demand is price elastic.
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Key terms
- Indirect tax
- A tax on spending on goods and services, collected from sellers; a specific tax shifts the supply curve vertically upward by the amount of tax per unit.
- Tax incidence
- How the burden of a tax is shared between buyers and sellers, which depends on the relative price elasticities of demand and supply.
9Income elasticity of demand
measures the responsiveness of the demand for a good to a change in consumers' income, with the good's price and all other influences unchanged. YED = % change in quantity demanded ÷ % change in income. A change in income shifts the whole demand curve, so YED measures the direction and size of a shift, not a movement along the curve.
The sign of YED matters, unlike the sign of PED. A positive YED means that demand rises when income rises: the good is a . A negative YED means that demand falls when income rises: the good is an , which consumers replace with something they prefer once they can afford it. Typical examples are the cheapest staple foods, second-hand clothes and bus travel in places where richer households buy cars.
For normal goods the size of YED matters as well. If YED is between 0 and 1, demand is income inelastic: quantity demanded rises by a smaller percentage than income. These goods are such as basic food, water and household energy. Households already buy roughly what they need, so extra income adds little to the quantity. If YED is greater than 1, demand is income elastic: quantity demanded rises by a larger percentage than income. These are and many services, such as restaurant meals, foreign travel, private education and entertainment.
| YED | Type of good | If income rises by 10%, quantity demanded… | Typical examples |
|---|---|---|---|
| Negative | Inferior good | falls | Cheapest staple foods, second-hand clothes |
| Between 0 and 1 | Normal good with income-inelastic demand (necessity) | rises by less than 10% | Basic food, household energy |
| Greater than 1 | Normal good with income-elastic demand (luxury goods and services) | rises by more than 10% | Restaurant meals, air travel |
A positive YED is not enough to call a good a luxury: +0.4 belongs to a normal good that is a necessity, and +1.8 to a normal good with income-elastic demand. The category also depends on who is buying. Rice can be a normal good for a low-income household and an inferior good for a richer one, and a good that is a luxury in a low-income country can be a necessity in a high-income one.
As with PED, the formula can be rearranged. Keep the sign of YED: for an inferior good a rise in income gives a fall in quantity demanded.
- % change in quantity demanded = YED × % change in income.
- % change in income = % change in quantity demanded ÷ YED.
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Key terms
- Income elasticity of demand (YED)
- The percentage change in quantity demanded divided by the percentage change in income.
- Normal good
- A good for which an increase in real income tends to increase demand, with preferences and other influences held constant.
- Inferior good
- A good for which an increase in real income tends to reduce demand as consumers switch toward preferred alternatives.
- Necessity good
- A normal good with positive income elasticity below one, so demand rises less than proportionally with income.
- Luxury good
- A normal good with income elasticity greater than one, so demand rises more than proportionally with income.
10The Engel curve
An shows how the quantity demanded of a good changes as income changes, with the good's price held constant. In this lesson income is on the vertical axis and quantity demanded on the horizontal axis. Some textbooks reverse the axes, which reverses the meaning of 'steep' and 'flat', so always label both.
For a normal good the curve slopes upward: the higher the income, the more is bought. If demand is income elastic, quantity rises by a larger percentage than income, so the curve becomes flatter as income rises; drawn as a straight line, it starts from the income axis. If demand is income inelastic, quantity rises by a smaller percentage than income, so the curve becomes steeper; drawn as a straight line, it starts from the quantity axis. A straight line from the origin has a YED of exactly 1.
For an inferior good the curve bends backward: as income rises, less is bought. One good can pass through every stage. At low incomes households buy more of it as income rises, then the quantity stops growing, and at higher incomes they replace it with something they prefer, so the quantity falls.
Check your understanding
Key terms
- Engel curve
- A curve showing how the quantity demanded of a good changes as income changes, with the good's price held constant.
11Beyond the syllabus: cross-price elasticity of demand
XED = % change in the quantity demanded of good A ÷ % change in the price of good B. A positive XED means that the goods are substitutes: a higher price for B shifts demand for A to the right. A negative XED means that they are complements: a higher price for B shifts demand for A to the left. The closer the value is to zero, the weaker the link between the two goods.
Key terms
- Cross elasticity of demand (XED)
- The percentage change in quantity demanded of one good divided by the percentage change in the price of another good.
- Substitute goods
- Goods that can satisfy a similar want, so a rise in the price of one may increase demand for the other.
- Complementary goods
- Goods commonly consumed together, so a change that makes one more expensive or less attractive can reduce demand for the other.
HL extension
12HL: PED along a straight-line demand curve
A straight-line demand curve has a constant slope but not a constant elasticity. The slope compares absolute changes in price and quantity, which are the same everywhere on the line. compares percentage changes, and the percentage that a given change represents depends on the price and quantity it starts from.
Near the top of the curve the price is high and the quantity is low. A cut of $1 is a small percentage of the price, while the extra units sold are a large percentage of a small quantity, so demand is price elastic. Near the bottom of the curve the opposite holds: the same $1 is a large percentage of a low price and the extra units are a small percentage of a large quantity, so demand is price inelastic. Demand is elastic at every point above the midpoint of the line, unit elastic at the midpoint and inelastic at every point below it.
| Price ($) | Quantity | Total revenue ($) | PED for a small price change from this point | Demand is |
|---|---|---|---|---|
| 8 | 2 | 16 | −4 | price elastic |
| 6 | 4 | 24 | −1.5 | price elastic |
| 5 | 5 | 25 | −1 | unit elastic (midpoint) |
| 4 | 6 | 24 | −0.67 | price inelastic |
| 2 | 8 | 16 | −0.25 | price inelastic |
All figures are invented. Each $1 change in price changes quantity by 1 unit, so PED = (1 ÷ quantity) ÷ (1 ÷ price) with a minus sign, which is −price ÷ quantity on this curve.
The midpoint result does not depend on the slope of the line or on how the axes are scaled. Write the curve as P = a − bQ. Then PED = (ΔQ ÷ ΔP) × (P ÷ Q) = −(1 ÷ b) × (P ÷ Q). At the midpoint P = a ÷ 2 and Q = a ÷ (2b), so PED = −(1 ÷ b) × (a ÷ 2) ÷ (a ÷ (2b)) = −1 for every a and b. Stretching either axis changes how steep the line looks, not the percentages.
The path of follows from this. As price is cut from the top of the curve, demand is elastic, so total revenue rises. It reaches its maximum at the midpoint, where demand is unit elastic, and it falls as price is cut further through the inelastic part, as the table shows. A firm that cuts its price in order to raise revenue therefore succeeds only while it is on the upper half of its demand curve. At the midpoint marginal revenue is zero, a result used again in the topic on market power.
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HL extension
13HL: PED of primary commodities and manufactured products
A is a product of agriculture, fishing, forestry or mining that is sold with little or no processing: wheat, coffee, cotton, copper, crude oil. A has been made from raw materials in a factory: clothing, cars, phones. The PED for primary commodities is generally lower than the PED for manufactured products, and the reasons follow from the determinants of PED.
- Few substitutes: a primary commodity usually has no close substitute in its main use. Food as a whole has none, a steel mill cannot replace iron ore, and a chocolate maker cannot replace cocoa. Manufactured products come in many brands and models that do the same job, so buyers switch easily when the price of one rises.
- Necessity: many primary commodities are necessities, either as staple foods for households or as the raw materials and energy that firms must have in order to produce at all. Many manufactured products are purchases that can be postponed or done without.
- A small share of the final price: a commodity is often a small part of the cost of the product it goes into. Cocoa is a fraction of the price of a chocolate bar and wheat a fraction of the price of bread, so even a large rise in the commodity's price changes the final price, and the quantity bought, only a little. Manufactured products such as cars and appliances take a large share of a household's income, so buyers respond more to their prices.
Low PED has two consequences for producers of primary commodities. First, a change in supply, such as a good or a bad harvest, causes a large change in price and only a small change in quantity, so prices are unstable. Second, because demand is price inelastic, total revenue moves in the same direction as price: a bumper harvest lowers the price by a larger percentage than it raises sales, so growers' incomes fall in the years when output is highest. The low price elasticity of supply of primary commodities, covered in the lesson on elasticity of supply, adds to the instability.
The difference is a general pattern, and its exceptions follow the same determinants. A commodity with a close substitute has more elastic demand: food processors switch between palm, soybean and sunflower oil when one becomes dearer. Over a longer period the demand for any commodity becomes more elastic, as its users change their methods of production. And a manufactured product with strong brand loyalty or no rival, such as a patented medicine, can have very inelastic demand.
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Key terms
- Primary commodityHL
- An agricultural or raw material product, often subject to long production cycles and limited short-run supply flexibility.
- Manufactured productHL
- A transformed good produced through industrial processes, often with greater ability to vary output in the short run.
HL extension
14HL: applications of YED
A firm that knows the of its products can forecast how its sales will change as incomes change. When the economy is growing and incomes are rising, demand for income-elastic goods and services grows faster than income, so their producers can plan to expand capacity, recruit and invest. In a recession incomes fall, and the same producers face the largest falls in sales. Demand for necessities changes little in either phase, so their producers have steadier sales. Demand for inferior goods rises in a recession, which is why discount retailers can gain customers when incomes fall.
The forecast guides decisions. A firm can spread its risk by selling products with different YEDs, such as a supermarket's premium and budget ranges, so that falling sales of one are offset by rising sales of the other. It can choose its markets: a producer of income-elastic goods gains most from entering countries or regions where incomes are growing quickly. And over the long run it can move out of products with low or negative YED, whose markets will shrink relative to the economy as incomes rise.
YED also explains why the structure of an economy changes as it grows. As incomes rise over time, demand grows slowly for goods with low YED and quickly for goods with high YED. Food and other primary products are mostly , manufactured goods have higher YED, and many services higher still. The primary sector's share of output and employment therefore tends to fall as an economy grows, while the shares of the secondary (manufacturing) sector and then the tertiary (services) sector rise. Primary output can keep growing in absolute terms; it is its share of the total that falls.
For producers of primary products the consequence is serious. World demand for their output grows more slowly than world income, which, together with low PED, holds down the prices and incomes they earn relative to producers of manufactured goods and services.
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Key terms
- Income elasticity of demand (YED)
- The percentage change in quantity demanded divided by the percentage change in income.
- Necessity good
- A normal good with positive income elasticity below one, so demand rises less than proportionally with income.
- Luxury good
- A normal good with income elasticity greater than one, so demand rises more than proportionally with income.
15Revision summary and common mistakes
- PED = % change in quantity demanded ÷ % change in price. YED = % change in quantity demanded ÷ % change in income. Each percentage change uses the old value as its base.
- PED is negative; its size gives the degree. Below 1 is price inelastic, 1 is unit elastic and above 1 is price elastic. A vertical demand curve is perfectly inelastic and a horizontal one is perfectly elastic.
- Demand is more price elastic when the good has more and closer substitutes, is a luxury, takes a large share of income, or when consumers have longer to respond.
- Price and total revenue move in the same direction when demand is price inelastic and in opposite directions when it is price elastic. At unit elasticity total revenue does not change.
- YED is positive for normal goods and negative for inferior goods. It is between 0 and 1 for necessities and above 1 for luxury goods and many services. On an Engel curve a normal good slopes up and an inferior good bends back.
- To work backwards: % change in quantity = elasticity × % change in price or income, and % change in price or income = % change in quantity ÷ elasticity.
16Practice and feedback: 2 marks
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26Practice and feedback: 15 marks
HL extension
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HL extension
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31Sources and review status
Written with AI assistance. The sources below were consulted on ; each entry says what it was used for and what it does not cover. Not reviewed by a teacher. Not approved as a finished revision resource.
Not yet checked against any source: determinants of price elasticity of demand other than time (substitutes, degree of necessity, proportion of income spent); the Engel curve diagram; HL: why demand for primary commodities is less price elastic than demand for manufactured products; HL: applications of YED (importance for firms and for the sectoral structure of the economy).
Sources consulted
Diploma Programme Economics guide (course first assessed 2022; October 2022 update; cover reads "First assessment 2024")
International Baccalaureate. IB curriculum document, learner's own copy, 10 Nov 2026. Printed pp. 20-21 (syllabus outline) and the topic tables on the printed pages recorded on each syllabus node; assessment outline pp. 60-65; command terms pp. 74-75. PDF page = printed page + 6.
Used for: Topic titles, the scope of each topic and SL/HL level, the assessment format and the command terms, as recorded on each syllabus node.
Limits: Read from the learner's own PDF, which is not redistributed. The IB's online copy could not be opened by automated access (HTTP 403 on 11 November 2026), so this copy was not compared with it. It sets what must be taught; it does not explain the economics. AI-assisted reading, not checked by a teacher.
Principles of Microeconomics 3e: 5.1 Price Elasticity of Demand and Price Elasticity of Supply
OpenStax, Rice University. Reference, read in full, 11 Nov 2026. 5.1, including elasticity, percentage change and the midpoint alternative
Used for: Independent textbook cross-check of elasticity as a ratio of percentage changes and the difference between slope and elasticity.
Limits: Uses the midpoint method; IB Vault uses initial values and says so. Does not list the determinants of PED or of PES and does not discuss total revenue. University-level US textbook; not an authority for IB scope or level.
Principles of Microeconomics 3e: 5.2 Polar Cases of Elasticity and Constant Elasticity
OpenStax, Rice University. Reference, read in full, 11 Nov 2026. Section 5.2
Used for: Perfectly elastic demand and supply are horizontal; perfectly inelastic are vertical; a constant unit-elastic demand curve is curved and a unit-elastic supply curve is a straight line from the origin.
Limits: Diagram description only; no IB-style calculation. University-level US textbook: its wording, examples and diagrams are not IB wording and it is not an authority for IB scope or SL/HL level.
Principles of Microeconomics 3e: 5.3 Elasticity and Pricing
OpenStax, Rice University. Reference, read in full, 11 Nov 2026. 5.3, including total revenue, cost pass-through and tax incidence
Used for: Elasticity and total revenue; passing costs on to consumers; tax incidence by relative elasticity; short-run versus long-run elasticity.
Limits: Does not list the determinants of PED. Uses its own numerical examples. University-level US textbook; not an authority for IB scope or level.
Gasoline prices tend to have little effect on demand for car travel
U.S. Energy Information Administration (Today in Energy). Real-world source, read in full, 11 Nov 2026. Today in Energy article, 15 December 2014
Used for: EIA's short-run price elasticity estimate for US motor gasoline / car travel (-0.02 to -0.04) and the mid-1990s comparison (about -0.08).
Limits: US data and a short-run estimate from 2014; long-run elasticities are larger.
World Health Organization. Real-world source, read in full, 11 Nov 2026. Health-topic overview, taxation paragraph
Used for: The WHO statement that a tax increase raising tobacco prices by 10% cuts consumption by about 4% in high-income countries and about 5% in low- and middle-income countries.
Limits: A rounded global average, not an estimate for any one country or year; elasticities are larger in the long run and for young and low-income smokers.
World Health Organization. Real-world source, read in full, 11 Nov 2026. Key facts and the taxation section
Used for: Deaths from tobacco and second-hand smoke, the 75%-of-retail-price tax benchmark and the number of countries meeting it.
Limits: Global headline figures; no country detail.
Principles of Microeconomics 3e: 5.4 Elasticity in Areas Other Than Price
OpenStax, Rice University. Reference, read in full, 11 Nov 2026. 5.4, income elasticity and cross-price elasticity
Used for: Independent cross-check of YED and XED formulas and the substitute/complement sign relationship.
Limits: University textbook treatment. XED is supplied in IB Vault as an optional extension because it is not in the current 2.5 statement list.
The State of Commodity Dependence 2023
UN Trade and Development (UNCTAD). Real-world source, read in full, 11 Nov 2026. Publication landing page summary
Used for: UNCTAD's definition of commodity dependence (more than 60% of merchandise export value from commodities) and its statement on vulnerability to price and quantity shocks.
Limits: The landing page read does not give the number of dependent countries; take any count from the full report before using it.
Soft Drinks Industry Levy comes into effect
HM Treasury. Real-world source, read in full, 11 Nov 2026. News story, 5-6 April 2018
Used for: Levy start date, the two rates and sugar thresholds, the share of manufacturers that reformulated and the fall in expected revenue from GBP 520m to GBP 240m.
Limits: Published at launch: revenue is a forecast and no health outcome is measured.
Beverage prices surge amid supply shortfalls
World Bank (Data Blog). Real-world source, read in full, 11 Nov 2026. Blog post, 11 March 2024, cocoa and coffee paragraphs
Used for: Cocoa price changes in 2023 and February 2024 and the Cote d'Ivoire supply shortfall attributed to El Nino-linked heavy rain.
Limits: A staff blog summarising World Bank commodity price data; it gives percentage changes, not a price level, and does not cover the later 2024 peak.