At the initial market equilibrium, the income elasticity of demand for public bus transport is -0.4, and the price elasticity of supply is +1.2. Then, there is a 5% increase in consumers' average real income.
Which one of the following combinations, A, B, C or D, is most likely to show the changes in the market equilibrium price and quantity?
Price: Higher | Quantity: Lower
Price: Higher | Quantity: Higher
Price: Lower | Quantity: Lower
Price: Lower | Quantity: Higher
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.