Product X has a price elasticity of demand of 2.0 and many close substitutes. Product Y has a price elasticity of demand of 0.2 and no close substitutes. If both prices rise by 5%, which outcome is most likely?
Quantity demanded falls by 1% for X and 10% for Y, so both firms' revenues rise
Quantity demanded falls by 10% for both products, so both firms' revenues fall
Quantity demanded falls by 1% for both products, so both firms' revenues rise
Quantity demanded falls by 10% for X and 1% for Y, so revenue is likely to fall for X but rise for Y
41 exam-style questions on OCR GCSE Economics 2.2 Demand, covering 2.2.1 What is demand, 2.2.2 Draw a demand curve using data, 2.2.3 Explain a demand curve, 2.2.4 Shifts and movements of the demand curve, 2.2.5 Causes and consequences of demand changes, 2.2.6 Price elasticity of demand, 2.2.7 Draw demand curves of different elasticity, and 2.2.8 Importance of price elasticity of demand. Each one has a worked solution and a mark scheme showing where the marks go.