This question was attempted by many of the candidates who performed fairly above average. Candidates generally provided expected answers for the (a) and (c) parts of the question but only a few of them attempted the (b) part of the question appropriately.
The candidates who scored low marks in this question failed to provide the following answers:
(b) The determinants are:
- Nature of the commodity: That is, whether the commodity is a
necessity or luxury. Necessary goods have inelastic demand while
luxury goods have elastic demand.
- Substitutes: Commodities having substitutes have more elastic demand
while those without substitutes have inelastic demand.
- Number of uses: Commodities with variety of uses have elastic demand.
- Habits: Goods consumed as habits have inelastic demand.
- Consumer’s income: Where the percentage of customers’ income spent
on a commodity is large, demand tends to be price elastic and vice versa.
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