From 2014 to 2015, Sao Paulo, a major city in Brazil, built more than 120 km of cycle-only lanes next to roads. The city has a car culture, and demand for car travel is price-inelastic. By contrast, in Copenhagen, the capital of Denmark, 36% of commuter journeys are now made by bicycle, which has reduced the demand for car travel in the city.
(a)[2]
Define the term ‘price-inelastic demand’.
(b)[4]
Explain two reasons for a leftward shift of a demand curve.
(c)[6]
Analyse ways in which a government could encourage the purchase of bicycles.
(d)[8]
Discuss whether governments ought to discourage the use of cars.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The percentage change in demand is smaller than the percentage change in price” …