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1.2.3 Price, income and cross elasticities of demand

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Question 37

The Chief Financial Officer of CreativeCloud Solutions, David Miller, argued that 'premium tiers must reflect their premium value' during a strategy meeting for their digital asset suite, PixelFlow Studio. He stated: 'We have historically undervalued our annual enterprise license, but we must be cautious of the demand sensitivity at this tier.'

In January 2024, CreativeCloud Solutions increased the annual license price of PixelFlow Studio by £72 from its original price of £480. Market researchers project that this price increase will result in a 10.5% decrease in the quantity of licenses demanded. Ceteris paribus, calculate the price elasticity of demand for the PixelFlow Studio annual license. Show your working.

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1.2.3 Price, income and cross elasticities of demand Questions

  1. A Level
  2. /Economics
  3. /1.2.3 Price, income and cross elasticities of demand

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.

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