Over the last decade, with the exception of temporary economic downturns, sales of organic fresh produce in the UK have steadily grown. Several drivers have shaped this expansion. These include shifts in consumer lifestyle preferences, greater awareness of environmental sustainability, and rising household incomes.
Additional factors include the pricing strategies of major supermarkets and the availability of organic alternatives. Understanding the elasticities of demand and supply is crucial for forecasting how these shifting dynamics impact market prices and quantities traded. Recent econometric studies estimate that the income elasticity of demand for organic fresh produce is highly positive, at around +1.4, whereas the price elasticity of demand is approximately -1.3.
Define the term 'price elasticity of demand' (Extract B, paragraph 2).
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.