Explain the factors that determine whether the price elasticity of demand for a good is likely to be relatively inelastic.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. [2] For Knowledge and Understanding: For understanding of what is meant by price elasticity of demand (1 mark) For an incorrect formula or no formula 1 max For an accurate formula
2. [2] For understanding what is meant by 'relatively inelastic'.
3. [4] For Application: To show how a number of factors cause the demand for a product to be inelastic (If only one factor then 2 max)
4. [4] For Analysis: For an explanation of how knowledge of the price elasticity of demand could be useful for governments with reference to the strengths and weaknesses of this measure.
5. [4] For an explanation of how knowledge of the income elasticity of demand could be useful for governments with reference to the strengths and weaknesses of this measure.
6. [4] For Evaluation: That exercises judgement in considering which elasticity might be more useful for governments. This must include a conclusion.