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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

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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 Percentage Change in Price

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Answer

The initial price of the Ford Endeavour is 30m Rupee and the final price is 30.9m Rupee.

Percentage Change in Price = ( \frac{(30.9 - 30)}{30} \times 100 = \frac{0.9}{30} \times 100 = 3% )

Step 2

Use PED to Find Change in Quantity Demanded

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Answer

From Extract D, the Price Elasticity of Demand (PED) for Ford is -2.75. The formula for PED is given by:

[ PED = \frac{% \text{ Change in Quantity Demanded}}{% \text{ Change in Price}} ]

Substituting the values into the formula, we rearrange it to find the percentage change in quantity demanded:

[ % \text{ Change in Quantity Demanded} = PED \times % \text{ Change in Price} ]

[ % \text{ Change in Quantity Demanded} = -2.75 \times 3 = -8.25% ]

Step 3

Final Answer

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Answer

The percentage change in quantity demanded for the Ford Endeavour in 2019 is -8.25%. This indicates a decrease in demand following the price increase.

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