AS Paper 1, November 2020Introduction to Markets and Market Failure
AS Paper 1, November 2020, Q2(a)
The income elasticity of demand for bus travel is estimated to be –1.5. This implies that:
Multiple choice1 mark
Aa 10% increase in fares will lead to a 15% decrease in passengers
Bas unemployment falls, more people will use buses
Cbus travel has a negative cross elasticity of demand compared to rail travel
Dbus travel is an inferior good