Economics 2281 · O Level · Price elasticity of demand (PED)
Price elasticity of demand (PED) — practice question
In 2019, France operated within its production possibility curve (PPC). France sells a broad variety of products overseas. It is the world’s leading exporter of luxury perfume and the 7th biggest exporter of soap. Technological change affects the goods people make and purchase. The French government is planning to improve its infrastructure so that every household can get internet access.
(a)[2]
Define 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, how an increase in income will affect the market for a luxury brand of perfume.
(d)[8]
Discuss whether or not the public sector ought to be responsible for providing 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: “A diagram that shows maximum output / possible combinations” …