Question 21N.3.HL.TZ0.g
| Date | November 2021 | Marks available | [Maximum mark: 2] | Reference code | 21N.3.HL.TZ0.g |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate | Question number | g | Adapted from | N/A |
Chia seeds are an agricultural good produced in many countries and priced in US dollars (US$).
Figure 1 illustrates the market for chia seeds in a small country called Nofiberland. D is the domestic demand and S is the domestic supply for chia seeds. Chia seeds can be initially imported at the current world price of US$15.00 per kg. Sw is therefore the world supply faced in Nofiberland with free trade. To protect Nofiberland producers, the government decides to impose a US$6.00 tariff on chia seed imports. St is therefore the world supply faced in Nofiberland after the tariff is imposed.
Figure 1
Calculate the price elasticity of demand for chia seeds in Nofiberland following the imposition of the tariff.
[2]
PED =
Any valid working (correct %Δ Qd(X) or %Δ P(X), provided the formula is not inverted) is sufficient for [1]. However, simply stating the correct % (e.g. a denominator of 40 %) is not sufficient.
PED = 0.43 or −0.43 or
An answer of 0.43 or −0.43, without any valid working is sufficient for [1].
If a % sign is used in the final answer, a maximum of [1] may be awarded.
Calculation of PED should be very straightforward for HL candidates. However, many were careless and used the incorrect denominator or mixed initial values with final values.
