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

Income elasticity of demand — practice question

In the diagram, the supply curve indicates the number of spaces in a car park, while the demand curves indicate the demand for spaces on four separate days (D1, D2, D3 and D4). The owner wants to set a parking fee on each of these days so that the spaces are allocated according to the market mechanism. Which pricing policy should the owner use?

  • Aset a fixed price at P1
  • Bset a fixed price at P4
  • Cvary prices between P2 and P3
  • Dvary prices between P1 and P4

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