Practise IB Economics HL 2.1.5 by analysing demand shifts using related goods and cross-price elasticity evidence.
Note that widgets and pidgets are imaginary products.
In the country of Burbia, the demand and supply of widgets are given by the functions
where Qd is the quantity demanded per month, Qs is the quantity supplied per month and P is the price per widget in dollars ($).
Widgets and Pidgets have negative cross price elasticity of demand (XED).
Explain how the demand function for Widgets, Qd=249-4 P, is likely to change as a result of an increase in the price of Pidgets.
The demand for widgets is considered to be unit elastic at the current price.
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Marks
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The work does not meet a standard described by the descriptors below.
1
The written response is limited.
The idea that demand for widgets will decrease or demand shifts to the left.
2
The written response is accurate.
For explaining that demand for widgets will decrease and hence the "a term" intercept or horizontal intercept or Q-intercept will decrease.