Use this PEC O-Level Economics Paper 2 2022 marking scheme for checking answers, revision, and exam preparation in Zimbabwe.
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This is the PEC O-Level Economics marking scheme for Paper 2 from 2022. It shows how marks are awarded, so you can mark your own answers.
MR KAYBEE ECONOMICS PAPER TWO PEC EXAMINATION (2022) EXPECTED MARKING GUIDE Question 1 (a) (i) Elasticity of demand refers to the degree of responsiveness of quantity demanded to a change in one of its determinants such as price or income. (ii) It is normal good as it has positive relationship between change in income and quantity demanded. It has elastic demand because a change in income is causing more than proportionate change in quantity demanded. The value of +1.1 confirms this status. (b) (i) Business flights are more inelastic than leisure flights because business class has to move even prices are high or low. In the same way, availability of no substitutes or lesser number of close substitutes makes its demand inelastic. (ii) Long-distance flights are less elastic than short-distance flights having same purpose. The reasons for this trend may be less availability of substitutes because when substitutes availability are a few then people have to demand that product irrespective of price changes. Short-distance flights are comparatively elastic as its substitutes are easily available. Long-distance flights involve longer-time to find out their substitutes, so it is less elastic. (c) (i) The value of price elasticity of demand is of much importance as every businessman has to set prices accordingly. That is, when the demand is elastic then price cutting will help in increasing total revenue for the firms because a smaller fall in price will lead to more than proportionate rise in quantity demanded, as is the case of shortdistance leisure flights. (ii) Nevertheless, price cutting will result in fall in total revenue for the firm when its demand is inelastic because a fall as is the case of long-distance leisure flights. Profit maximization is the aim of every business organisation so, it is conscious to set prices by keeping in mind the value of price elasticity of demand. For a service that gives you Honour, Dignity \& Comfort contact us on: +263 718181255 [app]