Gce Model Questions Vol1 2022 Economics Question 3

Practice essay / theory question 3 from the 2022 Gce Model Questions Vol1 Economics examination. This question covers Elasticity of demand, Total revenue .

Gce Model Questions Vol1 2022 Economics Essay / Theory

Topics: Elasticity of demand Total revenue

Question 3 GCE_MODEL_QUESTIONS_VOL1 • 2022 • ECONOMICS • essay

A small electronics retailer sells a particular model of headphones. In January the price was ₦12,000 and 150 units were sold. In February the price was increased to ₦14,000 and sales fell to 120 units.

Question Parts

( a )

Calculate the price elasticity of demand between January and February using the midpoint (arc) method. Show all steps.

( b )

Interpret the calculated elasticity. State whether demand is elastic, inelastic or unit‑elastic and explain what this implies for total revenue when price rises.

( c )

Based on your analysis, advise the retailer whether to increase or decrease the price if the aim is to maximise total revenue. Justify your recommendation using the elasticity concept.

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About This Question

This is Gce Model Questions Vol1 2022 Economics Question 3. It is one of the essay questions from the 2022 Gce Model Questions Vol1 Economics examination.

The question covers Elasticity of demand, Total revenue .

View More Gce Model Questions Vol1 2022 Economics Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

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