Markets and Business Behaviour

Calculate the new equilibrium price and quantity following the successful advertising campaign and the fall in production costs. Use the last two columns for your working.

Research conducted in New Zealand in 2014 estimated the cross elasticity of demand for e-cigarettes to be 0.16 in response to changes in the price of tobacco. This implies that a 5% increase in the price of tobacco will cause the percentage change in demand for e-cigarettes to be:

Assume that the change in the quantity of tea purchased was only caused by the change in the price of tea. Calculate the price elasticity of demand for tea in response to the rise in its price. You are advised to show your working.

Calculate the change in total sales revenue for UK tea retailers between 2010 and 2015. You are advised to show your working.

Estimates for the demand for black tea in the UK suggest that it is an inferior good. This implies it has a negative:

Calculate the total domestic cooking gas subsidy paid daily by the Indian government. You are advised to show your working.

Calculate the percentage share of the total subsidy received by consumers.

Calculate the percentage share of the total subsidy received by producers.

One effect of the subsidy is to increase:

Draw a cost and revenue diagram to show the likely impact of a reduction in sales of construction equipment on JCB’s profits.

Diagram needed. Open the original question paper for the diagram ↗

In India JCB has a strong brand image and a 50% share of the market for construction equipment. This means the construction equipment market in India is likely to have a low level of:

Which one of the following is a fixed cost to Starbucks?

Explain the difference between fixed costs and variable costs.

With reference to Figure 1, calculate the profit (in pence) for a cappuccino drink. You are advised to show your working.

Case study · Supermarket price war, food waste and possible mergers

With reference to Figure 1 and Extract A, explain one likely reason for the change in the four-firm concentration ratio of the supermarket sector between 2010 and 2015.

Case study · Supermarket price war, food waste and possible mergers

With reference to Figure 2 and Extract A, discuss the possible impact of supermarket monopsony power on both food suppliers and consumers.

Case study · Supermarket price war, food waste and possible mergers

Examine measures the government might use to restrict the monopsony power of supermarkets.

Case study · Supermarket price war, food waste and possible mergers

Assess the extent to which ‘information gaps’ (Extract B, lines 5 and 6) and ‘irrational behaviour’ (Extract B, line 11) are the main causes of food waste in the UK.

Case study · Supermarket price war, food waste and possible mergers

Discuss the likely problems for Sainsbury’s and Morrisons if the suggested merger between them goes ahead. Refer to Figure 1, Extract C and your own knowledge in your answer.

Evaluate the likely microeconomic effects of such a tax.

‘Revenue maximisation is a more realistic business objective than profit maximisation for many businesses.’ To what extent do you agree with this statement? Refer to an industry of your choice in your answer.