Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

(a)[8]

Using economic analysis, explain the possible reasons for the rise in sales of electronic goods, such as mp3 players, in recent years.

(b)[12]

Suggest two possible reasons why a government might raise the indirect tax on such goods and discuss, in the light of these reasons, how effective such a policy is likely to be.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: Recognising the importance of demand and supply

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