Gce Model Questions Vol1 2020 Economics Question 15

Practice objective / multiple choice question 15 from the 2020 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2020 Economics Objective / Multiple Choice Medium Difficulty
Question 15 GCE_MODEL_QUESTIONS_VOL1 • 2020 • ECONOMICS • objective

The market demand for a product is given by \( Q = 120 - 4P \), where \(Q\) is quantity demanded and \(P\) is price (in dollars). At the current price of £10, calculate the price elasticity of demand using the point‑elasticity formula. Then, if the price is increased to £12, predict whether total revenue will increase or decrease, and compute the new total revenue.

Answer Options

A. Elasticity = -1.2 (elastic); total revenue rises to £864
B. Elasticity = -0.8 (inelastic); total revenue falls to £720
Correct Answer C. Elasticity = -0.5 (inelastic); total revenue rises to £864
D. Elasticity = -0.5 (inelastic); total revenue falls to £720
Correct Answer
C
Correct Option:
Elasticity = -0.5 (inelastic); total revenue rises to £864

About This Question

This is Gce Model Questions Vol1 2020 Economics Question 15. It is one of the objective questions from the 2020 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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