In 2019, France was producing within its production possibility curve (PPC). France exports a broad range of products. It is the world’s top exporter of luxury perfume and the 7th largest exporter of soap. Technological change influences the goods that people make and buy. The French government plans to improve infrastructure so that every household can have internet access.
(a)[2]
Define what is meant by a production possibility curve.
(b)[4]
Explain why demand for soap is more price-inelastic than demand for a luxury brand of perfume.
(c)[6]
Analyse, using a demand and supply diagram, the effect of a rise in income on the market for a luxury brand of perfume.
(d)[8]
Discuss whether or not the public sector should be responsible for the supply of all internet services.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Represents the highest possible combinations of two goods” …