AS Paper 1, June 2016Introduction to Markets and Market Failure

AS Paper 1, June 2016, Q5(b)

The price elasticity of demand for petrol is –0.2. Explain the change to the total revenue of petrol stations as a result of cutting their prices.

Short answerExplain3 marks

Context

“Since peaking at 132p a litre in July 2014, petrol prices have fallen by 20%”.

Specification topics

Price, income and cross elasticities of demand

Revision notes

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