In May 2018, a public health research paper reported that a 15% increase in the price of sugary soft drinks would reduce consumption by 6% in high-income households and by 12% in low-income households.
The above statement suggests that:
consumers in high-income households are twice as brand-loyal to sugary drinks as those in low-income households.
demand for sugary drinks is price elastic for both low-income and high-income households.
income elasticity of demand for sugary drinks is positive for low-income households and negative for high-income households.
price elasticity of demand for sugary drinks is negative for both high-income and low-income households.
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.