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Economics (AS & A Level) · May / June 2026 · Paper 14 · Question 9

9708Price elasticity, income elasticity and cross elasticity of demand

A firm supplies a highly competitive market with mobile phones and the apps used with them. The market price of mobile phones rises but the price charged for apps remains the same. What are the most likely consequences for expenditure on this firm's mobile phones and apps?

  1. Aexpenditure on phones falls; expenditure on apps falls
  2. Bexpenditure on phones rises; expenditure on apps falls
  3. Cexpenditure on phones falls; expenditure on apps unchanged
  4. Dexpenditure on phones rises; expenditure on apps unchanged

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Correct answer: A. expenditure on phones falls; expenditure on apps falls

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