Gce Model Questions Vol1 2025 Economics Question 21

Practice objective / multiple choice question 21 from the 2025 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2025 Economics Objective / Multiple Choice Medium Difficulty
Question 21 GCE_MODEL_QUESTIONS_VOL1 • 2025 • ECONOMICS • objective

The market demand for a product is linear and can be expressed as \(Q = a - bP\). When the price is £8, the quantity demanded is 500 units, and when the price is £12, the quantity demanded falls to 300 units. (a) Determine the price elasticity of demand at the price £10. (b) If the price is subsequently increased to £11, will total revenue increase or decrease? State your conclusion.

Answer Options

A. Elasticity = -1.75; total revenue will increase.
B. Elasticity = -0.80; total revenue will increase.
Correct Answer C. Elasticity = -1.25; total revenue will decrease.
D. Elasticity = -1.00; total revenue will stay the same.
Correct Answer
C
Correct Option:
Elasticity = -1.25; total revenue will decrease.

About This Question

This is Gce Model Questions Vol1 2025 Economics Question 21. It is one of the objective questions from the 2025 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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