O-LevelEconomicsThe allocation of resources2281/11 · May/June 2024 · Q71 Mark

A firm changes the price of its product and finds that its revenue increases. Which combination of price change and price elasticity of demand would have caused this?

Aprice falls, price elasticity of demand between 0 and 1

Bprice falls, price elasticity of demand equal to 1

Cprice rises, price elasticity of demand between 0 and 1

Dprice rises, price elasticity of demand greater than 1

✓ Correct answer

C: price rises, price elasticity of demand between 0 and 1

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, May/June 2024 Paper 1 Variant 1, question 7.

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