A self-service laundry estimates that the PED for its wash cycles is -0.4. An online language-course provider estimates that the PED for its subscriptions is -1.6. Each business is considering cutting its price by 5%. Treat both estimates as accurate and assume that nothing else affecting demand changes.
Which business should cut its price if its sole objective is to increase total revenue?
Only the online language-course provider should cut its price
Both businesses should cut their prices
Neither business should cut its price
Only the self-service laundry should cut its price
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.