Use the concept of income elasticity of demand to explain how a rise in incomes would affect the demand for an inferior good and for a necessary good.

Mark scheme

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

1. [1] For statement of what the concept measures
2. [2] For an accurate formula
3. [1] For elaboration e.g. in terms of elastic/inelastic
4. [2] showing how inferior goods react when incomes rise.
5. [2] showing how necessary goods react when incomes rise
6. [6] For analysis of any policy available to business to increase sales when incomes are falling with due reference to the strengths and weaknesses of the policy. (Up to 6 marks for each policy)
7. [3] For evaluation that assesses and compares the relative strengths and weaknesses of each policy
8. [1] to reach a conclusion concerning which policy is most likely to be successful.