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

Income elasticity of demand — practice question

(a)[8]

Explain how an equilibrium price for a product is determined in the market and how it can change.

(b)[12]

Discuss whether a firm’s revenue would increase in response to price and income changes if the price elasticity and income elasticity of demand for its product became highly elastic.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: Understanding/definition of equilibrium (D = S) and no tendency to change

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