A public health study recently reported that a 30% increase in the price of sugary soft drinks would reduce consumption among high-income households by 9% and among low-income households by 15%.
From this information, it can be concluded that:
for high-income households, sugary soft drinks are an inferior good.
demand for sugary soft drinks is price inelastic for both household groups.
low-income households purchase a larger volume of sugary soft drinks than high-income households.
the demand of low-income households for sugary soft drinks is price elastic, while that of high-income households 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.