A bakery experiences a significant increase in the demand for its specialty bread.

Mark scheme

Marking points from the official mark scheme. The mark or mark type is shown in brackets.

1. 2(a) AO1: One mark for each valid factor identified (Max 2).
2. - e.g., Increase in consumer income (1)
3. - Successful advertising campaign (1)
4. - Fall in price of complement (1)
5. - Rise in price of substitute (1)
6. - Change in tastes/preferences (1)
7. 2(b) AO2: (Max 4 marks)
8. - Correctly labelled diagram showing initial equilibrium (Price, Quantity, D1, S1, axes) (1)
9. - Shift of demand curve to the right (D2) (1)
10. - New equilibrium with higher price clearly indicated (P2) (1)
11. - New equilibrium with higher quantity clearly indicated (Q2) (1)
12. - *Alternative for explanation without diagram (Max 2):*
13. - B1 for explanation of demand shift (e.g., consumers willing to buy more at each price).
14. - B1 for explanation of resulting higher price and quantity.
15. 2(c) AO3/AO4: (Max 6 marks)
16. - AO3 (up to 3 marks) for analysis of benefits:
17. - e.g., higher revenue if demand is inelastic (1), leading to increased profit (1), ability to invest/expand (1).
18. - AO3 (up to 3 marks) for analysis of drawbacks:
19. - e.g., fall in total revenue if demand is elastic (1), potential loss of market share to substitutes (1), negative impact on consumer loyalty (1), attracting new competitors (1).
20. - AO4 (1 mark) for reasoned conclusion based on analysis:
21. - e.g., depends on price elasticity of demand (1), market structure, long-term strategy.