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1.3 Price determination in a competitive market

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Question 32

The income elasticity of demand (YEDYEDYED) for organic vegetables is +1.5, and the cross elasticity of demand (XEDXEDXED) for organic vegetables with respect to the price of conventional vegetables is +0.8.

If consumer incomes rise by 4% and the price of conventional vegetables simultaneously falls by 5%, what is the expected net percentage change in the quantity demanded of organic vegetables, assuming all other factors remain constant?

A

−2.0%-2.0\%−2.0%

B

+2.0%+2.0\%+2.0%

C

+10.0%+10.0\%+10.0%

D

−4.3%-4.3\%−4.3%

Markscheme

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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