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Work out the price elasticity of demand of Coca Cola when the demand rises from 1 million to 2 million following a price decrease of £1.50 to £1.35. Is this price elastic or price inelastic?

Price elasticity of demand = % change in quantity demanded / % change in price PED = ((2m - 1m)/1m x100) / ((1.35-1.5)/1.5 x100) PED = 100/-10PED= -10 it is price elastic since PED < -1
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Answered by Nandini M. • Economics tutor
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Explain the difference between expansionary and contractionary fiscal policies

Define key terms: Expansionary - Used in deflationary gap to cause AD to shift right an stimulate economic growth (accelerator) and Fiscal - A set of government policies that increase the quantity and qualit...
MD
Answered by Matthew D. • Economics tutor
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Explain two possible government responses to the abuse of monopoly power.

Monopoly power refers to the ability of a firm to set prices. Legislation is a form to reduce monopoly power. Most countries have laws that try to promote competition by preventing collusion between oligopol...
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Answered by Jasmine S. • Economics tutor
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What are the different assumptions of a perfectly competitive market and a market with monopolistic competition?

The main characteristics of a perfectly competitive market include: (1) a very large number of small, price-taking firm; (2) a homogenous product is being sold; (3) there are no barriers to entry or exit; an...
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Answered by Zeina D. • Economics tutor
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What are the characteristics of a perfectly competitive market structure?

Perfect competition is a market structure in which there are a large number of small firms competing very intensely. In this market structure no firm has the power to influence the price or supply of traded ...
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Answered by Ismael O. • Economics tutor
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