Using the data in Table 1.2, calculate the monthly revenue from the sales of the classic pie after the price increase.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2025). The mark or mark type is shown in brackets.

1. Correct new sales revenue 3500 × $3.60 = $12 600 (4)
2. $ sign not required
3. New quantity of sales 5000 - 30% = 5000 - 1500 = 3500 (3)
4. % change in QD 20% × -1.5 = (-)30% (2)
5. Percentage change in price OR PED equation 0.60/3.00 × 100 = (+) 20% (1)
6. Percentage change in Quantity demanded / Percentage change in price
7. No creditable response (0)
8. Limited knowledge K will be demonstrated through knowledge of the concept of elasticity of demand or knowledge or marketing strategy.
9. Developed knowledge K + K will be demonstrated through knowledge of the concept of elasticity of demand and knowledge of marketing strategy.
10. Knowledge of elasticity of demand
11. Understanding of different elasticity concepts:
12. promotional elasticity measures responsiveness of demand to changes in promotional spending
13. price elasticity measures responsiveness of demand to a change in price
14. cross price elasticity measures the responsiveness of demand to a change in price of another product
15. income elasticity measures the responsiveness of demand to a change in income.
16. Understanding of inelastic - not responsive and elastic - responsive to change in price / promotion / income.
17. Knowledge of marketing strategy
18. Marketing strategy includes market research and marketing mix to achieve marketing objectives within a budget.
19. Marketing mix consists of price, place, promotion and product
20. Do not reward APP for quoting elasticities, need to show understanding of the figures.
21. Limited application, APP applies knowledge to PPP once.
22. Developed application, APP + APP applies knowledge to PPP twice.
23. Estimated PED for classic pies is –1.5, which is price elastic, as confirmed by the calculation in 3a, the 20% increase in price would lead to a 30% decrease in demand.
24. Estimated PED for premium pies is –0.4, which is price inelastic. The 25% increase in price only led to a 10% decrease in demand
25. OFR for PED calculations
26. YED for classic pies is −1.2 (inferior good) and for premium pies +1.5 (normal/luxury good)
27. Monthly sales revenue following price increases would decrease (by $2400) for classic pies but increase (by $3000) for premium pies.
28. Market research data may suggest whether the demand for the proposed new cheese pie will be price elastic or price inelastic in other countries in the region.
29. As real incomes are falling in other countries in the region, cheese pies may be more successful if seen as a 'budget' product.
30. Limited analysis AN candidate shows one link in the chain of analysis.
31. Developed analysis L2 AN candidate shows two or more links in the chain of analysis.
32. Knowledge of PED is useful to PPP in making decisions about pricing. For example, elastic PED would indicate that an increase in price would decrease revenu AN and therefore probably decrease prc L2 AN
33. Decreasing price, such as using a launch penetration price will increase quantity of cheese pies demanded and therefore increase revenue/encourage more customers to try the new produAN overall leading to a successful launch and loyal customers increasing profi L2 AN
34. As real incomes are falling, launching cheese pies as a 'budget' item should lead to higher sales due to negative YED. AN
35. Limited evaluation EVAL limited supported judgement and/or a weak attempt at evaluative comment.
36. Developed evaluation L2 EVAL supported judgement and/or reasonable evaluative comment.
37. Developed evaluation in contex L3 EVAL supported judgement in context and/or reasonable evaluative comment in context.
38. In a marketing strategy, PPP will also consider other factors e.g. promotional elasticity of demand and local tastes in different countries in the region.
39. As this is a new pie product being launched, existing elasticity data for other products may not be as useful
40. To what extent may a pan global strategy be suitable in this case?
41. A judgement about the usefulness of elasticity to marketing mix decisions.
42. A judgement about the most important factors influencing marketing strategy decisions.
43. A judgement about the limitations of elasticity calculations.
44. Measurement of elasticity is difficult and likely to be inaccurate due to large range of factors that will affect outcomes, particularly competitor decisions. Other things don't remain equal in markets.
45. Factors that the judgement could depend on including the degree of competitive rivalry in the market
46. Other elements of marketing strategy are important e.g. integrated marketing mix to ensure consistency in message communicated to potential customers and therefore attract sales.
47. Accept all valid responses.