The Determinants of PED: SPLAT — Price Elasticity of Demand (PED) | IGCSE Economics

Exam Frequency Analysis

Past paper frequency (2018 to 2024)

This topic accounts for approximately 15% of your exam marks.

increasing

Very High

Increasing15%

PED definition, formula, calculation, and revenue application appear regularly; trending upward since 2021.

The PED of a good depends on five non-price factors. The mnemonic SPLAT is the one most commonly used at IGCSE.

Letter	Stands for	Effect on PED
S	Substitutes (number and closeness)	More (and closer) substitutes → demand is more elastic (consumers can switch easily). Fewer substitutes → more inelastic.
P	Proportion of income spent on the good	A good that takes a large share of consumer income → more elastic (consumers notice the price rise). A small share → more inelastic.
L	Luxury or necessity	Luxuries (designer bags, holidays, expensive electronics) → more elastic (consumers can do without). Necessities (basic food, medicine) → more inelastic.
A	Addictiveness / habit / brand loyalty	Addictive or habit-forming products (cigarettes, caffeine, gambling) → more inelastic (consumers keep buying despite price rises). Strong brand loyalty has a similar effect.
T	Time period	Short run: more inelastic (consumers cannot change habits or find substitutes quickly). Long run: more elastic (alternatives are found, habits change).

A trap that examiners specifically test:

A change in the price of substitutes is a demand shifter (topic 4), not a PED determinant. The number and closeness of substitutes is the PED determinant. The two phrases sound similar but mean different things.
A change in income shifts the demand curve. The proportion of income the good represents is what determines its PED.