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Question 18M.1.SL.TZ1.1a

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Date May 2018 Marks available [Maximum mark: 10] Reference code 18M.1.SL.TZ1.1a
Level SL Paper 1 Time zone TZ1
Command term Explain Question number a Adapted from N/A
a.
[Maximum mark: 10]
18M.1.SL.TZ1.1a
(a)

Explain how the value of the cross price elasticity of demand (XED) for a particular good is determined by its relationship to other goods.

[10]

Markscheme

Answers may include:

  • definition of XED
  • diagram(s) to show the impact of XED, eg using shifts of demand when there is a change in price of another good, or price of X/quantity of Y type diagrams to show substitutes and complements
  • explanation in terms substitutes (positive XED), complements (negative XED) and no relationship/a weak relationship/a strong relationship (ie magnitude)
  • examples of goods which are substitutes/complements.

NB Candidates can only be awarded Level 4 if they consider both positive/negative and make at least some brief reference to magnitude, ie a maximum of Level 3 for consideration of just one or the other.

Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part A.

Syllabus sections