DP Economics Questionbank

Evaluate the consequences of rising incomes on service sector producers (such as hotels) and primary sector producers (such as rice farmers).

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.

Country D is an economically less developed country that specializes in the production of primary products. 

Explain two implications for Country D of a relatively low income elasticity of demand for its primary products.

Examine the significance of both cross price elasticity of demand and income elasticity of demand for a firm.