Edexcel Economics A level Paper 3 Questions And Answers
2025/2026
Demand - CORRECT ANSWER-The quantity of a good/service that consumers are
willing and able to buy at a given price in a given time period.
Factors shifting demand curve - CORRECT ANSWER-P opulation
A dvertisement
S ubstitutes
I ncome
F ashion/trends
I nterest rates
C omplements
PED - CORRECT ANSWER-How responsive QD is to a change in price.
% change in QD / % change in price.
% change calculation - CORRECT ANSWER-change/original * 100
,change = new - original
PED values + meanings - CORRECT ANSWER-= 0: perfectly inelastic
= 1: unit elastic
< 1: inelastic demand
> 1: elastic demand
= infinity: perfectly elastic
Factors of PED + explain - CORRECT ANSWER-S ubstitutes (more substitutes =
more elastic)
P ercentage of income (higher % of income = elastic)
L uxury/necessity (luxury = elastic, necessity = inelastic)
A ddictive (addictive = inelastic)
T ime period (LR = elastic)
PED and TR relation - CORRECT ANSWER-PED = elastic:
- if price increases, TR decreases.
- if price decreases, TR increases.
PED = inelastic:
- if price increases, TR increases.
- if price decreases, TR decreases.
,XED - CORRECT ANSWER-Measures the responsiveness of a change in quantity
demand of good A to a change in price of good B.
% change in QD of A / % change in price of B.
XED = + - CORRECT ANSWER-Goods A and B are substitutes:
> 1: elastic (close substitutes)
<1: inelastic (weak substitutes)
XED = - - CORRECT ANSWER-Goods A and B are complements:
> 1: elastic (close complements)
< 1: inelastic (weak complements)
XED = 0 - CORRECT ANSWER-Unrelated goods.
Any change in the price of one of the goods will lead to no change in the quantity
demanded of the other good.
YED - CORRECT ANSWER-Measures the responsiveness of quantity demanded to a
change in income.
% change in QD / % change in Y (income).
, YED = + - CORRECT ANSWER-Normal good: QD increases as income increases.
> 1: elastic (luxury)
< 1: inelastic (necessity)
YED = - - CORRECT ANSWER-Inferior good: QD decreases as income increases.
e.g: bus tickets, train tickets...
TR = - CORRECT ANSWER-P x Q
Profit = - CORRECT ANSWER-TR - TC
Elasticity of demand + indirect tax - CORRECT ANSWER-Demand = elastic:
Indirect tax = effective.
Demand will be very responsive (large decrease).
Demand = inelastic
Indirect tax = less effective.
Demand won't be very responsive (slight decrease).
e.g: tax on cigs (addictive = inelastic).
Elasticity of demand + subsidies - CORRECT ANSWER-Demand = elastic:
2025/2026
Demand - CORRECT ANSWER-The quantity of a good/service that consumers are
willing and able to buy at a given price in a given time period.
Factors shifting demand curve - CORRECT ANSWER-P opulation
A dvertisement
S ubstitutes
I ncome
F ashion/trends
I nterest rates
C omplements
PED - CORRECT ANSWER-How responsive QD is to a change in price.
% change in QD / % change in price.
% change calculation - CORRECT ANSWER-change/original * 100
,change = new - original
PED values + meanings - CORRECT ANSWER-= 0: perfectly inelastic
= 1: unit elastic
< 1: inelastic demand
> 1: elastic demand
= infinity: perfectly elastic
Factors of PED + explain - CORRECT ANSWER-S ubstitutes (more substitutes =
more elastic)
P ercentage of income (higher % of income = elastic)
L uxury/necessity (luxury = elastic, necessity = inelastic)
A ddictive (addictive = inelastic)
T ime period (LR = elastic)
PED and TR relation - CORRECT ANSWER-PED = elastic:
- if price increases, TR decreases.
- if price decreases, TR increases.
PED = inelastic:
- if price increases, TR increases.
- if price decreases, TR decreases.
,XED - CORRECT ANSWER-Measures the responsiveness of a change in quantity
demand of good A to a change in price of good B.
% change in QD of A / % change in price of B.
XED = + - CORRECT ANSWER-Goods A and B are substitutes:
> 1: elastic (close substitutes)
<1: inelastic (weak substitutes)
XED = - - CORRECT ANSWER-Goods A and B are complements:
> 1: elastic (close complements)
< 1: inelastic (weak complements)
XED = 0 - CORRECT ANSWER-Unrelated goods.
Any change in the price of one of the goods will lead to no change in the quantity
demanded of the other good.
YED - CORRECT ANSWER-Measures the responsiveness of quantity demanded to a
change in income.
% change in QD / % change in Y (income).
, YED = + - CORRECT ANSWER-Normal good: QD increases as income increases.
> 1: elastic (luxury)
< 1: inelastic (necessity)
YED = - - CORRECT ANSWER-Inferior good: QD decreases as income increases.
e.g: bus tickets, train tickets...
TR = - CORRECT ANSWER-P x Q
Profit = - CORRECT ANSWER-TR - TC
Elasticity of demand + indirect tax - CORRECT ANSWER-Demand = elastic:
Indirect tax = effective.
Demand will be very responsive (large decrease).
Demand = inelastic
Indirect tax = less effective.
Demand won't be very responsive (slight decrease).
e.g: tax on cigs (addictive = inelastic).
Elasticity of demand + subsidies - CORRECT ANSWER-Demand = elastic:
