Edexcel A Level Economics B
Edexcel A Level Economics B 2.2 Firms, Consumers and Elasticities of Demand Exam Questions
Free Edexcel A Level Economics B exam questions on 2.2 Firms, Consumers and Elasticities of Demand, with mark schemes. Covers PED, YED and XED and their use by firms.
2.2 Firms, Consumers and Elasticities of Demand exam questions
2 question packs of real past exam questions with their mark schemes. Answer every question without notes, then mark your answers line by line against the mark scheme.
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A Level Economics Flashcards
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Pick your exam board, then test yourself with the questions on this page.
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About Edexcel A Level Economics B 2.2 Firms, Consumers and Elasticities of Demand
2.2 applies elasticity to real business decisions. Questions often give you data and ask what it means for pricing or revenue.
What you need to know
- Price elasticity of demand PED = %ΔQd / %ΔP. Know the factors affecting it and the link to total revenue.
- Income elasticity of demand YED = %ΔQd / %ΔY. Normal goods are positive, inferior goods negative, luxury goods above 1.
- Cross elasticity of demand XED = %ΔQd of A / %ΔP of B. Substitutes are positive, complements negative.
- Uses for firms Pricing, forecasting sales during the trade cycle and responding to rivals.
Common mistakes in 2.2 Firms, Consumers and Elasticities of Demand
- Getting the sign of XED wrong for complements.
- Saying a price cut always raises revenue.
- Using absolute changes instead of percentage changes.
Try three 2.2 Firms, Consumers and Elasticities of Demand exam-style questions
1. A 10 percent rise in income causes a 5 percent fall in demand for a good. Calculate YED and identify the type of good. (2 marks)
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YED = -5 / 10 = -0.5 (1), so it is an inferior good (1).
2. Explain why a firm with price inelastic demand might raise its price. (2 marks)
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Quantity demanded falls proportionately less than the price rise (1), so total revenue increases (1).
3. Explain what a positive XED between two products shows. (2 marks)
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They are substitutes (1), so a rise in the price of one increases demand for the other (1).
2.2 Firms, Consumers and Elasticities of Demand FAQs
What does Edexcel A Level Economics B 2.2 cover?
PED, YED and XED, the factors affecting them and how firms use elasticity.
Do I need to calculate elasticities?
Yes, from percentage changes or raw data, and interpret the result.
Why does YED matter in a recession?
Firms selling luxury goods with high YED see sales fall sharply when incomes fall.
Revise this topic with flashcards: A Level Economics Flashcards, with mark scheme answers for Anki and Quizlet.
