Question 21M.1.SL.TZ2.1a
| Date | May 2021 | Marks available | [Maximum mark: 10] | Reference code | 21M.1.SL.TZ2.1a |
| Level | SL | Paper | 1 | Time zone | TZ2 |
| Command term | Explain | Question number | a | Adapted from | N/A |
Explain why the price elasticity of demand for primary commodities is often relatively low while the price elasticity of demand for manufactured goods is often relatively high.
[10]
Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.
Answers may include:
- definitions of PED, primary commodities, manufactured goods
- diagram(s) to show low (inelastic) demand for primary commodities and high (elastic) demand for manufactured goods
- explanation of low PED for primary commodities and high PED for manufactured goods in terms of the number and closeness of substitutes, degree of necessity and proportion of income spent on the good
- examples of primary commodities with a relatively low PED and manufactured goods with a relatively high PED.
There were many good responses to this question with good explanations of the difference between the price elasticity of demand of primary commodities and manufactured goods, The best answers gave detailed coverage of how commodities are more likely to be necessity goods with relatively few substitutes compared to manufactured goods, which makes the demand for commodities relatively price inelastic. The best answers used effective real-world examples to illustrate the points made.
