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1.3 Price determination in a competitive market

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Question 80

The cross elasticity of demand (XEDXEDXED) between Good X and Good Y is -0.4. Which one of the following statements is correct?

A

Goods X and Y are substitute goods because their cross elasticity of demand is negative.

B

A 15%15\%15% increase in the price of Good Y leads to a 6%6\%6% fall in the quantity demanded of Good X.

C

A 5%5\%5% increase in the price of Good Y leads to a 12.5%12.5\%12.5% fall in the quantity demanded of Good X.

D

The cross-price demand relationship between the two goods is highly elastic.

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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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