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1.3 Price determination in a competitive market

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Question 62

Goods A A\,A and B B\,B are known to be strong substitutes. Good A A\,A is also classified as an inferior good.

Which one of the following combinations, A, B, C or D, correctly identifies the sign of the cross elasticity of demand (XEDABXED_{AB}XEDAB​) of Good A A\,A with respect to the price of Good BBB, and the sign of the income elasticity of demand (YEDAYED_AYEDA​) of Good AAA?

Cross elasticity of demand (XEDABXED_{AB}XEDAB​)Income elasticity of demand (YEDAYED_AYEDA​)
APositivePositive
BPositiveNegative
CNegativePositive
DNegativeNegative
A

Combination A

B

Combination B

C

Combination C

D

Combination D

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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