A municipal transport authority reports that a 16% increase in the price of monthly subway passes leads to an 8% decrease in the quantity of passes demanded by adult commuters, and a 20% decrease in the quantity demanded by student commuters.
From this information, it can be concluded that:
for student commuters, monthly subway passes are an inferior good.
demand for monthly subway passes is price inelastic for both commuter groups.
adult commuters purchase a larger absolute volume of monthly subway passes than student commuters.
the demand of student commuters for monthly subway passes is price elastic, while that of adult commuters is price inelastic.
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.