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Limitations of non-pricing strategiesThe implementation of these strategies may be costly and these high costs may offsetrevenue earned. In addition, other taxi companies may also follow suit, hence defeating thepurpose of implementing the strategy in the first place, which is to differentiate product andmaking demand inelasticLimitations of PEDElasticity are based on Elasticity are based on past data - taste and expenditure changesover time, making the data less useful. With the rise of the internet, the elasticity figures willchange quickly. Hence the firm would need to collect updated empirical data and evidence.Based on the assumptions of ceteris paribus - there are various factors that affect thedemand for a product. The three concepts of elasticity only considers price, price of relatedgood and income level. The taxi firm needs to consider ways to reduce costs. He will need tomonitor the cost structure to ensure that his firm is cost effective.Knowledge, Application, Understanding and AnalysisL3L2L1For an answer that has a well-developed analysis of PED, PES and howPremier Taxis can make use of the price elasticity concept in devising price,non-price and output strategies, with application to the given context of taxisFor Top L3 marks, students must include answers of PED
(4) 2011 DHS Prelim H2 Paper Q1Households today pay on average just half the amount they were paying in early 2008 fortheir broadband internet connection. On the other hand, food prices have risen by 18% overthe same period.a. Explain the likely effects of the above price changes on households’ expenditure.[10]b. To stabilise food prices, several governments have released grains and frozen meatfrom their stockpiles. To what extent does the success of this policy depend on theprice elasticities of demand and supply?[15]Suggested AnswerPart (a)Recognisethedifferencesin PEDbetween the2 gdsEffect of thepricechange onhhs’expenditure(economicintuition)(graphs)Internet broadband connectionDemand for internet broadband connectionis likely to be price elastic.Broadband internet connection is a nonnecessity,part of their discretionaryspending after they have satisfied theirbasic needs àQd is likely to be responsiveto price changes(Students may also argue that PEDdepends on the country / type of householdin question. Demand for bandwidth may beprice inelastic for high Y countries andhouseholds that enjoy online gaming,where it is seen as a necessity à totalexpenditure may fall with falling prices)Give price elastic demand, a reduction inthe price brings about an increase inexpenditure.A reduction in its price, ceteris paribus,brings about a larger than proportionateincrease in Qdàreduction in expenditurefrom lower per unit spending(P 1 P 0 ab)more than compensated by increase inspending from increased units bought(Q 0 bc Q 1 ) à increase total expenditureFoodDemand for food is likely to be priceinelastic.Food as a necessity is required forsurvival, not something that individualscan do without even as its price risesàQd is likely to be unresponsive to pricechangesGive price inelastic demand, an increasein the price brings about an increase inexpenditure.An increase in its price, ceteris paribus,brings about a smaller than proportionatereduction in Qd à increase inexpenditure from higher spending per unit(P 2 P 3 hg) more than offsets the decreasein expenditure from from cutback in unitsbought (Q 3 gfQ 2 ) àincrease totalexpenditure
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ST ANDREW’S JUNIOR COLLEGEH1 ECON
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demand for hotel accommodation. The
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Cost/Benefits/$ Welfare loss MSC =
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more than proportionate fall in qua
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Price S P 1 P 2 D 1 D 2 Market for
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ERP• Works by charging drivers an
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2010 YJC Prelims H1 Paper CSQ1: Hou
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quantity transacted increases and h
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with the large amount of subsidies
Page 19 and 20: (b) With the help of a diagram, ana
Page 21 and 22: Hence as long as the West is willin
Page 23 and 24: Marks Scheme:L3( 7 - 8m)L2(4 - 6m)L
Page 25 and 26: conclusion about absolute value of
Page 27 and 28: • Germany’s revival has been bu
Page 29 and 30: ising making labour relatively more
Page 31 and 32: (ii)With reference to the data, ass
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Page 35 and 36: (b)Explain how a rise in interest r
Page 37 and 38: (d)Consider whether the evidence in
Page 39 and 40: The higher spending, translating in
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Page 43 and 44: This will increase SOL of Chinese a
Page 45 and 46: 2. Appreciation is also needed to d
Page 47 and 48: Increase Real output for Asiaproduc
Page 49 and 50: Section B: EssaysMicroeconomics:1.
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Page 53 and 54: With reference to Figure 2 above, (
Page 55 and 56: Conclusion:The future impact in the
Page 57 and 58: ConclusionSummarise and link to par
Page 59 and 60: Explain causes ofan increase in pri
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Page 64 and 65: Take astandConclusionPrice ceiling
Page 66 and 67: Possible non-price determinants of
Page 68 and 69: Suggested answer (b)Price elasticit
Page 72 and 73: Internet broadband connectionFoodEf
Page 74 and 75: 3. Antithesis: success of policy do
Page 76 and 77: EvaluationE2For a reasoned judgemen
Page 78 and 79: LevelsL3(7m - 10m)L2(5m - 6m)L1(1m
Page 80 and 81: Subsidies to ConsumersWith governme
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Page 84 and 85: Therefore the market is said to be
Page 86 and 87: (b) INTRODUCTIONTo address the prob
Page 88 and 89: However, a total ban does not makes
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Page 96 and 97: lower standard of living. This is e
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Page 100 and 101: Explain how policies bring about ac
Page 102 and 103: ConclusionTo have sustained actual
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Page 110 and 111: Thesis (3) -Threat to improvement i
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Page 114 and 115: Trade PoliciesIn the light of an im
Page 116 and 117: • Real-‐wage unemployment o
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aggregate demand in U.S. and decrea
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Marking SchemeL3Well developed expl
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Conclusion on demand management pol
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E2 For an evaluative assessment bas
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Long run• Provided higher course
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• Exchange rate policy may not be
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economic growth, a fall in demand-d
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Illustration:Assumptions:• Only t
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(18) 2011 DHS Prelim H2 Paper Q1Sin
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Singapore does not specialise c
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As output increases, real national
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oooHigh level of integration in
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2010 IJC Prelim 2010 H2 Paper Q6(a)
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à growing affluence àrise in dema
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