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

Income elasticity of demand — practice question

(a)[8]

Reports indicate that global demand for chocolate is rising at a time when the supply of cocoa beans, the raw material needed to make chocolate, is lower than expected. Explain, with the aid of a diagram, the likely effects of these changes on the world market for chocolate products.

(b)[12]

Extremely high chocolate consumption can cause health issues such as obesity and diabetes, particularly among young children in developed economies. Discuss which policy is likely to be the most effective in reducing these problems.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: A precise diagram of chocolate demand and supply curves (1 mark).

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