Try setting this tricky Economics question for YOUR students!

A pub manageress notices that if the average price of a pint of lager is raised from £2.50 to £2.75, the demand for cider increases by 5% per period but the demand for beer nuts falls by 12%. Which of the following statements is CORRECT? (Click to answer.)

A. Sales revenue from lager will fall.

WRONG! We are not told specifically what happened to the sales of lager; we might assume quantity has fallen after a price rise, but without knowing by how much it is impossible to tell if the resulting fewer sales (albeit at a higher price) would have resulted in a fall or rise in overall lager sales revenue.

B. Beer nuts are a weak complement for lager.

WRONG! Beer nuts are a strong complement for lager as their cross-elasticity with respect to the price of lager is greater than -1 at -1.2 (a 12% fall has been caused by the 10% price rise for lager – 25p/£2.50).

C. Cider is a weak substitute for lager because its cross-elasticity with respect to beer is 0.5.

CORRECT! The correct option is (C); a weak substitute has a cross-price elasticity of demand value of less than 1; demand for the substitute is rising at a lower rate than the price rise which caused it. The answer here is 0.5 (5% / 10%).

D. Beer nuts have a negative cross-elasticity of demand with respect to the price of cider.

WRONG! (D) cannot be correct – within the data the price of cider is unchanged so a calculation cannot be performed.

Tricky Questions with Explanations for A Level Economics

Carefully constructed multiple-choice question bank, designed to challenge your students. Detailed commentary provides student-friendly explanations of why each answer is right or wrong.

Superb constructive feedback on every question, including advice on:

How to avoid typical errors
How to use diagrams and formulae
How to remove red herrings from your decision-making

Questions for every specification topic
Particular focus on trickier areas
Clear diagrams throughout

Provided in two formats:

Paper worksheets — ready to be set as topic tests or revision activities.
PowerPoint presentation, one per slide, perfect for starters. Ask students to vote on the answer — a great springboard for discussion!

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A Level Economics

AQA

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Cambridge OCR (from 2019)

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Edexcel A

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A Level Economics (last exams 2016)

AQA

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Edexcel

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Economics

A Level Economics

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