Sample 1

(a) Explain two reasons why the demand for primary commodities might be price inelastic. [10]Student answerPrimary commodities are goods produced by the primary sector of the economy. For example, agricultural goods. Price elasticity of demand is the measure of responsiveness of quantity demanded to a change in the price of a good or service.And it is measured by the equation % change in QD / % change in price. If the...

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