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Question 18N.1.SL.TZ0.a

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Date November 2018 Marks available [Maximum mark: 10] Reference code 18N.1.SL.TZ0.a
Level SL Paper 1 Time zone TZ0
Command term Explain Question number a Adapted from N/A
a.
[Maximum mark: 10]
18N.1.SL.TZ0.a

Explain how the price mechanism reallocates resources when there is an increase in demand for a good or service.

[10]

Markscheme

Answers may include:

  • definitions of price mechanism, resources, demand
  • diagram to show how an increase in demand leads to a reallocation of resources
  • explanation of how the signalling and incentive functions of price lead to a reallocation of resources when demand increases for a good or service
  • examples of goods and services where the price mechanism has reallocated resources because of an increase in demand.

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

Syllabus sections