Photo AI
In 2019 the price of a Ford Endeavour rose from 30m Rupee to 30.9m Rupee - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Question 2
In 2019 the price of a Ford Endeavour rose from 30m Rupee to 30.9m Rupee. Using this data and the information from Extract D, calculate the percentage change in quan... show full transcript
Worked Solution & Example Answer:In 2019 the price of a Ford Endeavour rose from 30m Rupee to 30.9m Rupee - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Step 1
Calculate the Percentage Change in Price
Answer
The initial price of the Ford Endeavour was 30 million Rupees and it rose to 30.9 million Rupees. The formula to calculate the percentage change in price is:
ext{Percentage Change in Price} = rac{ ext{New Price} - ext{Old Price}}{ ext{Old Price}} imes 100Substituting in the values:
ext{Percentage Change in Price} = rac{30.9 - 30}{30} imes 100 = rac{0.9}{30} imes 100 = 3 ext{\%}Step 2
Use the Price Elasticity of Demand (PED) for Ford
Answer
From Extract D, the PED for Ford is -2.75. Using the formula:
ext{PED} = rac{ ext{Percentage Change in Quantity Demanded}}{ ext{Percentage Change in Price}}We can rearrange it to calculate the percentage change in quantity demanded:
Substituting the values:
Step 3