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1.2.3 Price, income and cross elasticities of demand

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Question 35

A market research firm estimates that the cross elasticity of demand ( $X E D$ ) between hybrid vehicles and premium public transit passes is +1.5, while the income elasticity of demand ( $Y E D$ ) for premium public transit passes is -0.8. If the price of hybrid vehicles rises by 10% and consumer incomes simultaneously rise by 5%, what is the overall percentage change in the demand for premium public transit passes?

$+19%+19\%$

$+11%+11\%$

$−11%-11\%$

$+7%+7\%$

Markscheme

1.2.3 Price, income and cross elasticities of demand Questions

A Level
Economics
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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