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1.3 Price determination in a competitive market

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Question 1

A household's annual income increases from ÂŁ30 000 to ÂŁ31 500. All other things being equal, if the household's income elasticity of demand for Good A is -0.6 and its income elasticity of demand for Good B is 1.2, which one of the following statements is correct?

A

Spending on Good A will fall by ÂŁ45 and spending on Good B will increase by ÂŁ90

B

Spending on Good A will fall by ÂŁ450 and spending on Good B will increase by ÂŁ900

C

Spending on Good A will fall by 3% and spending on Good B will increase by 6%

D

Spending on Good A will fall by 30% and spending on Good B will increase by 60%

Markscheme

1.3 Price determination in a competitive market Questions

  1. A Level
  2. /Economics
  3. /1.3 Price determination in a competitive market

256 exam-style questions on AQA A Level Economics 1.3 Price determination in a competitive market, covering 1.3.1 The determinants of the demand for goods and services, 1.3.2 Price, income and cross elasticities of demand, 1.3.3 The determinants of the supply of goods and services, 1.3.4 Price elasticity of supply, 1.3.5 The determination of equilibrium market prices, and 1.3.6 The interrelationship between markets. Each one has a worked solution and a mark scheme showing where the marks go.

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