IB Economics SL 2.5.3 PED diagrams and revenue Question Bank

Level

0 The work does not reach a standard described by the descriptors below.

1 There is a correct diagram or an accurate written response.

For drawing a correctly labelled diagram showing a demand curve, with a price increase and a decrease in quantity, and revenue boxes showing an increase in export revenue or for an explanation that since these firms produce goods with few substitutes, the demand is inelastic, and so when price increases due to appreciation, the total revenue increases.

2 There is a correct diagram and an accurate written response. For drawing a correctly labelled diagram showing a demand curve, with a price increase and a decrease in quantity, and revenue boxes showing an increase in export revenue and for an explanation that since these firms produce goods with few substitutes, the demand is inelastic, and so when price increases due to appreciation, the total revenue increases.

Candidates may explain that the demand is unit elastic and so when the price increases due to appreciation, the total revenue will remain the same ("no reduction in export revenue"). If the diagram is also correct, this approach may be fully rewarded.

Candidates who incorrectly label diagrams can be awarded a maximum of [3].
The use of P and Q is sufficient for a demand and supply diagram. A title is not necessary.