Substitutes, complements, and how a firm reads a rival's price change before deciding whether to follow it.
Why did one streaming service raising its price change what you pay for another?
The economics does not change between boards — only the reference number and the exam style. This page is written to the concept, so find your own line below and read on.
| Specification | Reference | Section |
|---|---|---|
| AQA A-Level Economics 7136 | 4.1.3.2 | Price, income and cross elasticities of demand |
| Edexcel A Economics 9EC0 | 1.2.3 | Theme 1 |
| Pearson Edexcel IAL Economics | WEC11 · Unit 1 | Markets in action |
Substitutes, complements, and how a firm reads a rival's price change before deciding whether to follow it.
AQA sets this out as 4.1.3.2 — Price, income and cross elasticities of demand, inside Price determination in a competitive market. Demand, supply, and the four elasticities that carry Paper 1. It is assessed on Paper 1 and Paper 3.
Topic pages on this site are not written and abandoned. Each one gets the definition and the specification framing first, then the diagram drawn properly, then how the board actually examines it, and then the five branches below — added over months rather than dumped in one go.
This page is at the first stage. If you need this topic before then, the revision platform already covers the full specification interactively, and the Intelligence Briefing carries model answers on the essays most likely to appear.
Application is worth more marks than knowledge on this specification — AO2 carries 26–29% against AO1's 20–23%. So the examples are not decoration. They are where a third of the paper lives, and the ones that earn are the ones specific enough to be checked.
Netflix and Disney+ are substitutes, which is why one price rise moves both subscriber counts.
Petrol prices move SUV sales because the car and the fuel are complements.
A console is sold near cost because the games are where the complementary margin lives.
Each of these becomes a full piece in its own right, in the branches below. What is here is the hook; the argument, the data and the essay application are what the pieces are for.
Every question on this specification is marked against four assessment objectives, and they are not weighted equally. Most revision treats a topic as a body of knowledge; the paper treats it as four separate skills applied to that knowledge. This topic is examined as a calculate and interpret topic, so here is what each objective looks like on it specifically.
| Weight | What it is | What it means on cross elasticity of demand | |
|---|---|---|---|
| AO1 | 20–23% | Knowledge and understanding of terms, concepts, theories and models | Define the measure and state the formula. It is one mark and it is the one nobody should lose. |
| AO2 | 26–29% | Application of that knowledge to economic contexts | Use the figures in front of you. An answer that could have been written without reading the extract is capped low, however good the economics is. |
| AO3 | 26–29% | Analysis of issues and their impact on economic agents | Work the consequence through. The number is not the answer — what it implies for revenue, output or welfare is. |
| AO4 | 22–25% | Evaluation of arguments, using evidence to support a judgement | Say what the result depends on: the time period, the range of the data, and whether the relationship still holds at a different price. |
Everything above is the anchor. The pieces below take it further, and each one is built to train a particular assessment objective rather than to cover the topic again. They accumulate — nothing on this page gets deleted, it gets added to.
The revision platform covers the whole specification now, and the Academy marks your written answers against the framework examiners use. The library is the free layer, not the only one.
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