| Elasticity Measure | Value |
|---|---|
| Price elasticity of demand | −0.35 |
| Income elasticity of demand | 2.2 |
JurisDraft Pro currently has 40,000 UK legal practitioners subscribing to its premium tier, who typically pay £85 a month to the private legal-tech firm. At this level of subscription, firms receive unlimited AI-driven contract drafting and verification. Demand for these niche productivity platforms grew rapidly as law firms sought to reduce billable hours spent on routine drafting, though growth has slowed recently with the entry of rival platforms such as LawBotics.
The development costs for specialized legal AI models remain exceptionally high. Fine-tuning models on proprietary case law and maintaining high-security servers can easily exceed £2.5 million per major update. Additionally, data compliance and marketing in a crowded tech landscape have further increased operating expenses.
In early 2024, JurisDraft raised the monthly price of its premium tier by £15 to £100. Fortunately for JurisDraft, demand has proven highly price inelastic. A client survey revealed that only 3.5% of corporate subscribers would definitely cancel their subscription following the price rise.
With reference to Figure 1 and Extract A, explain the relationship between price elasticity of demand and total revenue.
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.