A kayak-hire centre is preparing a monthly revenue forecast for two-hour hires. Table 1 contains the figures for a proposed pricing decision.
| Item | Figure |
|---|---|
| Current charge per hire | £18.00 |
| Proposed charge per hire | £19.44 |
| Current monthly bookings | 800 |
| Estimated PED over this price range | −1.5 |
| Monthly total revenue target | £14,500 |
The centre assumes that the PED estimate predicts the change in bookings exactly and that it can supply every booking.
Using Table 1, calculate the forecast monthly total revenue at the proposed charge and state whether the centre would meet its target. Show your workings.
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.