Economics 9708 · AS & A Level · Cross elasticity of demand

Cross elasticity of demand — practice question

(a)[8]

Using a normal demand curve, explain how consumer surplus is created.

(b)[12]

Using diagrams, discuss whether consumers will benefit if a product is subject to (i) an indirect tax, and (ii) an effective maximum price.

  • (i) a form of indirect tax
  • (ii) a maximum price that is effective

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Knowledge of a normal downward-sloping demand curve and that consumer surplus is the gap between willingness to pay and actual price” …

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  • Step-by-step worked solution
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