Practise using PED, YED and XED to evaluate business and government decisions, including revenue, demand forecasts, data limits and stakeholder effects.
Assess the extent to which price elasticity of supply or cross elasticity of demand is more useful to businesses.
Assess the extent to which price elasticity of supply or cross elasticity of demand is most useful to businesses.
Use Table A: AO1 Knowledge and understanding and AO2 Analysis and Table B: AO3 Evaluation to mark candidate responses to this question.
AO1 and AO2 out of 8 marks. AO3 out of 4 marks.
Indicative content
Responses may include:
AO1 Knowledge and understanding and AO2 Analysis
- An assessment of the usefulness of PES e.g., it estimates how quickly a business will take to respond to changes in demand, levels of stock it can hold etc., but this is only an estimate and may change.
- An assessment of the usefulness of XED e.g., it tells the business whether their product is a substitute (positive XED) or a complement (negative XED) and how close the relationship is and hence its sensitivity to the actions of other businesses, but the speed of change may mean it is quickly out of date.
Level 1 responses will be assertive and lacking in explanations / mainly descriptive and/or or mainly lacking in relevance to the question.
Level 2 responses may contain some inaccuracies and will be one sided. Analysis will be explained at least in part and will be largely relevant to the question.
Level 3 responses will consider alternative policies / concepts etc. and will be balanced. Explanations of points raised will be offered and will be accurate and relevant to the question.
AO3 Evaluation
- For a full evaluation of the usefulness of both measurements compared with each other leading to:
- A valid conclusion
Marking guidance:
Accept all valid responses.
AO1 Knowledge and understanding and AO2 Analysis
AO3 Evaluation
EITHER