Analyse how indifference curve theory explains why a consumer will normally buy more of a good at a lower price than at a higher price.

Mark scheme

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

1. [12] Explanation of indifference curves, equilibrium point, b) link between indifference curves and demand curve c) discussion of how reduced price can affect equilibrium/demand for a normal product, shift of budget line.
2. L4 for a reasoned answer with a conclusion illustrating all the points, shape of curve, equilibrium, construction of demand curve, change in price, change in demand, 9–12
3. L3 for a competent answer that deals with part of the analysis, probably only briefly linking equilibrium to demand. 7–8
4. L2 for a less developed answer referring to indifference curves and budget lines. 5–6
5. L1 For an answer that has some basic correct facts but includes irrelevancies and errors of theory 1–4
6. [13] Discussion of inferior, (negative income does not outweigh positive substitution for price fall) Giffen goods, (negative income outweighs positive substitution for price fall). Effect on likely revenue to the firm, on tax revenues to government, relevance of price, income elasticity.
7. L4 for a sound explanation and discussion with good illustrations and a clear understanding of the principles involved with accurate links and a reasoned evaluation referring to firms and government.. 9–13
8. L3 for a competent explanation of the terms with accurate but limited discussion with some analysis of the links. 7–8
9. L2 for a correct but undeveloped explanation with some attempt at analysis but only brief discussion. 5–6
10. L1 For an answer that has some basic correct facts but includes irrelevancies and errors of theory 1–4