A self-storage facility receives £64,000 a month from renting 800 lockers at £80 each. Management plans to increase the monthly charge by 10%. The estimated PED for its lockers is -0.75.
Which entry should management use in its monthly budget if the PED estimate is accurate?
Charge £72.00, 860 lockers rented and monthly revenue falls by £2,080
Charge £88.00, 794 lockers rented and monthly revenue rises by £5,872
Charge £88.00, 740 lockers rented and monthly revenue rises by £1,120
Charge £88.00, 720 lockers rented and monthly revenue falls by £640
236 exam-style questions on AQA GCSE Economics 1.3 How prices are determined, covering 1.3.1a Demand and the factors that influence it, 1.3.1b The demand curve, 1.3.2a Supply and the factors that influence it, 1.3.2b The supply curve, 1.3.3a Determining equilibrium price, 1.3.3b Applying diagrams and showing revenue, 1.3.4a Complements and substitutes, 1.3.4b Effects of changes on related markets, 1.3.5a Price elasticity of demand, 1.3.5b Factors affecting price elasticity of demand, 1.3.5c Measuring PED and its implications, 1.3.6a Price elasticity of supply, 1.3.6b Factors affecting price elasticity of supply, and 1.3.6c Measuring PES and its implications. Each one has a worked solution and a mark scheme showing where the marks go.