3. Price Determination in Competitive Markets (AQA A Level Economics)

Table 3 shows the demand for and supply of oranges at a range of prices between 10 pence and 30 pence.

Table 3

As a result of an increase in consumers’ incomes, the demand for oranges increases by 25% at each of the prices shown in Table 3.

After the rise in incomes:

All other things being equal, the demand for labour is more likely to be wage elastic if

The diagram below shows the market demand (D) curve and two supply (S₁ and S₂) curves for a brand of soft drink. The drink is a demerit good because of its high sugar content. The government imposes an indirect tax on each can sold that cuts consumption by 100 000 cans per week.

If the price elasticity of demand for the drink is –2.0, the price must have increased by

Beef and leather are in joint supply. Changes in farming methods have resulted in a significant fall in the price of chicken, a substitute for beef. All other things being equal, which one of the following diagrams, A, B, C, or D, best illustrates the effects of the fall in the price of chicken on the market for leather?

The diagram below shows two market demand curves (D₁ and D₂) and the market supply curve (S), for Good X.

The price elasticity of supply of Good X when the demand curve shifts from D₁ to D₂ is

Explain the likely causes of the main changes in house prices that have taken place between 2007 and 2017.

At the initial market equilibrium, the income elasticity of demand for fresh chickens is +1.5, and the price elasticity of supply is +1.0. Then there is a 5% increase in consumers’ income.

Which one of the following combinations, A, B, C or D, is most likely to show the changes in the market equilibrium price and quantity?

The diagram below shows the demand curves (D₁ and D₂) and the supply curve (S) in the market for good X. The initial market equilibrium is at E₁.
 

The increase in market demand from D₁ to D₂ results in a new market equilibrium at E₂. The market mechanism that leads to the establishment of the new equilibrium is based on

The price elasticity of demand for games consoles is -1.2. It can be concluded that a 10% reduction in their price would lead to a percentage change in demand of

The price of good Y, a substitute for good X, rises from 75p to £1. As a result, the quantity of demand for good X rises from 3 million units to 5 million units per month.

What is the value of the cross elasticity of demand for good X with respect to good Y?

Using the data in Extract A (Figure 1), calculate the percentage change in the price of construction sand between January 2014 and January 2018. Give your answer correct to one decimal place

Explain how the data in Extract A (Figures 1 and 2) show that expansion in the global sand market is leading to prices of construction sand rising in real terms

Using the data in Extract D (Figure 3), calculate the amount of government funding per £ of passenger income in the UK rail industry for the year 2015–16. Give your answer correct to the nearest penny

Explain how the data in Extract D (Figure 4) show that in the UK, between 2004 and 2017, changes in the demand for rail travel contributed to changes in the price of rail travel