A national online garden retailer is considering a 10% increase in the prices of its houseplants and patio furniture. Its objective is to increase profit. The estimates below were calculated using information from the previous month.
| Product | Current price | Units sold per week | Estimated price elasticity of demand |
|---|---|---|---|
| Houseplant | £4.00 | 16,000 | -1.5 |
| Patio furniture set | £200.00 | 5,000 | -0.4 |
Current total weekly costs are £900,000. If both price rises go ahead, total weekly costs are forecast to be £875,000.
Evaluate how far the retailer can use the estimates to decide whether the proposed price rises will increase its profit.
82 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.