Gce Model Questions Vol1 2018 Economics Question 6

Practice objective / multiple choice question 6 from the 2018 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2018 Economics Objective / Multiple Choice Medium Difficulty
Question 6 GCE_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • objective

Given that when the price of a good is \(\text{₦}20\) the quantity demanded is 800 units, and when the price is \(\text{₦}30\) the quantity demanded falls to 500 units, assume the demand curve is linear. (a) Determine the price elasticity of demand at a price of \(\text{₦}25\) using the point‑elasticity formula. (b) If the price is increased by 5 % from \(\text{₦}25\), predict whether total revenue will rise or fall.

Answer Options

A. Elasticity ≈ -0.85 (inelastic); total revenue will increase.
Correct Answer B. Elasticity ≈ -1.15 (elastic); total revenue will decrease.
C. Elasticity ≈ -1.50 (elastic); total revenue will increase.
D. Elasticity ≈ -0.60 (inelastic); total revenue will decrease.
Correct Answer
B
Correct Option:
Elasticity ≈ -1.15 (elastic); total revenue will decrease.

About This Question

This is Gce Model Questions Vol1 2018 Economics Question 6. It is one of the objective questions from the 2018 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

View More Gce Model Questions Vol1 2018 Economics Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support