Gce Model Questions Vol1 2017 Economics Question 28

Practice objective / multiple choice question 28 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Easy Difficulty
Question 28 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

A linear demand curve for a product is given by \( Q = 500 - 20P \), where \(P\) is price in pounds and \(Q\) is quantity demanded. (a) Calculate the price elasticity of demand at \(P = £15\). (b) If the price rises to £16, what is the percentage change in total revenue? Give your answer for the percentage change to one decimal place.

Answer Options

A. Elasticity = -2.3; Revenue falls by 6.7%
B. Elasticity = -0.8; Revenue falls by 2.5%
C. Elasticity = -1.5; Revenue rises by 3.0%
Correct Answer D. Elasticity = -1.5; Revenue falls by 4.0\%
Correct Answer
D
Correct Option:
Elasticity = -1.5; Revenue falls by 4.0\%

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 28. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Easy .

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