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Date May 2017 Marks available 10 Reference code 17M.1.SL.TZ2.01
Level Standard level Paper Paper 1 Time zone Time zone 2
Command term Explain Question number 01 Adapted from N/A

Question

Explain why an increase in incomes over time may lead to an increase in demand for some goods but a decrease in demand for other goods.

[10]
a.

The income elasticity of demand for primary commodities tends to be relatively low, while the income elasticity of demand for manufactured goods and services tends to be higher. Examine the likely effects of this for individual producers and for the economy as a whole.

[15]
b.

Markscheme

Answers may include:

Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part A.

a.

Answers may include:

Examination may include: the differences in YED in developed and less developed economies, the importance of YED at different stages of development, the values of YED may change over time, the relative growth rates of different economies and the impact on YEDs.

Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part B.

b.

Examiners report

[N/A]
a.
[N/A]
b.

Syllabus sections

Last exams 2021 » Section 1: Microeconomics » 1.2 Elasticity » Income elasticity of demand (YED) » Income elasticity of demand and its determinants
Last exams 2021 » Section 1: Microeconomics » 1.2 Elasticity » Income elasticity of demand (YED)
Last exams 2021 » Section 1: Microeconomics » 1.2 Elasticity
Last exams 2021 » Section 1: Microeconomics

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