CourseCourseConceptConceptDocsDocuments

Edexcel A-Level Economics AS 1.3.2 Consumer Behaviour and Demand Questions

Practise explaining consumer choices, shifting demand and applying elasticity calculations, diagrams and revenue effects to real market evidence.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • explain rational and irrational consumer choices using utility, inertia, habit and information gaps
  • distinguish a price-driven movement along demand from a determinant-driven curve shift
  • draw demand shifts and new market equilibria from income, tastes, substitutes or advertising
  • calculate PED, YED or XED from percentage changes and show signed, rounded working
  • interpret elasticity sign and magnitude for responsiveness, normal goods and related goods

Covered syllabus points

1.3.2.1a - assumption of rationality in decision making: consumers aim decision making to maximise1.3.2.1b - Reasons why consumers may not aim to maximise utility: • the influence of other1.3.2.2a - concept of 'demand'1.3.2.2b - distinction between movements along a demand curve and shifts of a demand curve1.3.2.2c - concept of diminishing marginal utility and its significance for the shape of the1.3.2.2d - Factors that may cause a shift in the demand curve: • changes in the price of1.3.2.3a - concepts of 'price', 'income' and 'cross-elasticities of cross-elasticities demand'. of1.3.2.3b - use formulae to calculate price, income and cross-elasticities of demand1.3.2.3c - Interpretation of numerical values of price elasticity of demand: • perfectly price1.3.2.3d - factors influencing price elasticity of demand: • availability of substitutes •1.3.2.3e - calculate total revenue1.3.2.3f - price elasticity of demand varies along a straight line demand curve1.3.2.3g - relationship between price elasticity of demand and total cross-elasticities revenue.1.3.2.3h - Interpretation of numerical values of income elasticity of (continued) demand: •1.3.2.3i - Interpretation of numerical values of cross elasticity of demand. Significance for the1.3.2.3j - significance of price, income and cross-elasticities of demand for firms, consumers and

Question 1

[Maximum number: 1]

In April 2020 electricity prices increased on average by 10% in the UK. In the same month, a record number of 668371 consumers switched to cheaper electricity suppliers.

Which one of the following can explain the behaviour of those consumers who switched to cheaper electricity suppliers?

A

Consumers experienced habitual behaviour

B

Consumers aimed to maximise their utility

C

Consumers had poor computational skills

D

Consumers aimed to minimise their utility

Question 2

[Maximum number: 4]

In the USA 96 million consumers have never switched banks. 39% of consumers had accounts at the same bank as their parents. 13\% of consumers said that the process of switching involved too much time and effort.

With reference to switching banks, explain the difference between 'herding' and 'inertia'.

Question 3

[Maximum number: 1]

Which one of the following will cause a movement along the demand curve in the market for rice?

A

An increase in the global population

B

An increase in real incomes

C

A decrease in the price of noodles

D

A decrease in the price of rice

All question bank results loaded