The marketing department of a premium boutique gym has calculated that the price elasticity of demand (PED) for its monthly membership is -1.5. If the gym decides to increase its monthly membership fee by 10%, which of the following outcomes will occur?
Total consumer spending on memberships will increase, and the quantity demanded will fall by 15%15\%15%.
Total consumer spending on memberships will decrease, and the quantity demanded will fall by 15%15\%15%.
Total consumer spending on memberships will decrease, and the quantity demanded will fall by 1.5%1.5\%1.5%.
Total consumer spending on memberships will increase, and the quantity demanded will fall by 1.5%1.5\%1.5%.
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.