Question 1
Distinguish between the effect of an increase in income and an increase in the price of a good on the demand for the good.
Answers may include:
- definition of demand
- diagrams to show a movement along a demand curve and a shift of the demand curve
- explanation that an increase in price of a product will cause a movement along the demand curve and a change in income will cause a shift to the left or right
- examples of goods and services affected by price and income changes.
N.B. Specific reference to normal and inferior goods is not necessary.
Assessment Criteria
Part (a) 10 marks
Level 0 (0 marks): The work does not reach a standard described by the descriptors below.
Level 1 (1-3 marks): There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors.
Level 2 (4-6 marks): There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors.
Level 3 (7-8 marks): There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors.
Level 4 (9-10 marks): There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors.