Edexcel Economics A Level Paper 3 (Updated 2026/2027) – 185 Questions and Expert Verified Answers – Complete Exam Practice Material – Instant Download

EDEXCEL ECONOMICS A LEVEL
PAPER 3: 185 QUESTIONS AND
EXPERT VERIFIED ANSWERS

Demand - 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 - ANSWER- P opulation
A dvertisement
S ubstitutes
I ncome
F ashion/trends
I nterest rates
C omplements


PED - ANSWER- How responsive QD is to a change in price.


% change in QD / % change in price.


% change calculation - ANSWER- change/original * 100

,change = new - original


PED values + meanings - ANSWER- = 0: perfectly inelastic
= 1: unit elastic
< 1: inelastic demand
> 1: elastic demand
= infinity: perfectly elastic


Factors of PED + explain - 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 - 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 - 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 = + - ANSWER- Goods A and B are substitutes:
> 1: elastic (close substitutes)
<1: inelastic (weak substitutes)


XED = - - ANSWER- Goods A and B are complements:
> 1: elastic (close complements)
< 1: inelastic (weak complements)


XED = 0 - 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 - ANSWER- Measures the responsiveness of quantity
demanded to a change in income.


% change in QD / % change in Y (income).


YED = + - ANSWER- Normal good: QD increases as income increases.

, > 1: elastic (luxury)
< 1: inelastic (necessity)


YED = - - ANSWER- Inferior good: QD decreases as income increases.
e.g: bus tickets, train tickets...


TR = - ANSWER- P x Q


Profit = - ANSWER- TR - TC


Elasticity of demand + indirect tax - 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 - ANSWER- Demand = elastic:
Subsidies = effective.
Large increase in demand.