The demand for premium eco-friendly alternatives has faced massive challenges as macroeconomic conditions worsen. Many supermarkets have introduced eco-refill stations, encouraging shoppers to choose biodegradable plant-based laundry detergents over traditional synthetic chemical brands.
However, market research indicates that most price-conscious consumers are reluctant to pay a premium for eco-friendly alternatives when household budgets are squeezed. With average household disposable income falling by 6.0% in 2024, annual sales of biodegradable plant-based laundry detergent units in the region are projected to fall from 500,000 to 425,000.
Using the data in Extract A, explain the likely numerical value for the income elasticity of demand for biodegradable plant-based laundry detergent.
119 exam-style questions on Edexcel A A Level Economics 1.2.3 Price, income and cross elasticities of demand. Each one has a worked solution and a mark scheme showing where the marks go.