Can someone help me with this Economics A-Level question?

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meli77
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#1
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#1
With reference to Extract 1, discuss whether the demand for all cars is likely to be income elastic.

Thank youu
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Underground56_
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#2
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I recently achieved first class honours in BSc economics. So I guess I have some hints and tips to share with you. But I won’t answer this question for you.

In the field of economics it is always recommended to include diagrams. You should locate some diagrams in text books which explain the theory of income elasticity. Then try and analyse if the theory can explain what is happening currently in the market for cars.

Is the theory accurate in what it’s trying to say , are there any rigid assumptions and limitations to be considered. Be critical and include your own thoughts based on your findings.
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meli77
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Hi, thank you so much for your reply.

For my paragraphs, I am supposed to use the PEEL structure, have 1 analytical point and 3-4 chain links (don't remember what exactly they are, any ideas?)

This is my very first attempt at an essay style question in econ.

I wrote this. Could you please check this and give me some feedback? It would be a massive help!

I have attached Extract 1 if you need it.

The demand for cars is falling and therefore it could be argued that the demand for all cars is likely to be income elastic. Income elasticity of demand is the sensitivity of demand for a product to a change in real income. In the extract, it states that ‘New car sales fell by 21.8%… in response to a 1% fall in real income’ which links to the 2008 recession. This means that straight after the recession, consumers don’t have enough money to make purchases of luxury goods, which leads to a decrease in their demand, suggesting that cars have a positive income elasticity of demand. (Fall in real income causes a decrease in demand). Thus, this strengthens the view that the demand for all cars is likely to be income elastic because there is a sensitivity of the demand for cars due to a change in real income.
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meli77
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#4
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Hi,

This is my first time attempting an essay style question in econ so I am finding this question hard.

I managed to write one PEEL paragraph. Could you please read it and give me some feedback? It would be a massive help! I have attached the extract if you need it.

Thank you so much!

With reference to Extract 1, discuss whether the demand for all cars is likely to be income elastic.

The demand for cars is falling and therefore it could be argued that the demand for all cars is likely to be income elastic. Income elasticity of demand is the sensitivity of demand for a product to a change in real income. In the extract, it states that ‘New car sales fell by 21.8%… in response to a 1% fall in real income’ which links to the 2008 recession. This means that straight after the recession, consumers didn’t have enough money to make purchases of luxury goods, which led to a decrease in their demand, suggesting that cars have a positive income elasticity of demand. (fall in real income causes a decrease in demand). Moreover, a decline in the demand for cars doesn’t only affect the car manufacturing company, but other nearby businesses too. Thus, this strengthens the view that the demand for all cars is likely to be income elastic because there is a sensitivity of the demand for cars due to a change in real income.
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Saracen's Fez
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#5
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#5
I've put this in Economics study help for you, hopefully you're more likely to get a useful answer here.
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econhelp525
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#6
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#6
(Original post by meli77)
Hi,

This is my first time attempting an essay style question in econ so I am finding this question hard.

I managed to write one PEEL paragraph. Could you please read it and give me some feedback? It would be a massive help! I have attached the extract if you need it.

Thank you so much!

With reference to Extract 1, discuss whether the demand for all cars is likely to be income elastic.

The demand for cars is falling and therefore it could be argued that the demand for all cars is likely to be income elastic (AN). Income elasticity of demand is the sensitivity of demand for a product to a change in real income (KN). In the extract, it states that ‘New car sales fell by 21.8%… in response to a 1% fall in real income’ which links to the 2008 recession (APP). This means that straight after the recession, consumers didn’t have enough money to make purchases of luxury goods (AN), which led to a decrease in their demand, suggesting that cars have a positive income elasticity of demand (AN/KN). (fall in real income causes a decrease in demand)(KN). Moreover, a decline in the demand for cars doesn’t only affect the car manufacturing company, but other nearby businesses too (???). Thus, this strengthens the view that the demand for all cars is likely to be income elastic because there is a sensitivity of the demand for cars due to a change in real income.
This looks like Edexcel, so I'm unfamiliar with the markscheme, since I did AQA, but I've given a go at some marking of your work above.

KAA, it looks like you will get a maximum of 4/6 marks, maybe 3/6 if the examiner is feeling mean.

In this question, you need to evaluate, which you didn't do. Points you could've made were, e.g., depends on the car, as luxury cars have a higher PED than normal ones, etc.

You didn't draw a diagram, but that wasn't obligatory for the question, but would've been helpful.

I'm confused as to why you're doing a 2010 Economics paper, though? The structure has changed a lot since then, I would've thought.

Anyway, with 6 mark Edexcel questions like those, you get 4 marks for KAA (knowledge, application, analysis?), and 2 marks for evaluation.
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meli77
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#7
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Hi thank you so much. Our teacher gave us this question. It is out of 10 but you are meant to write 3 paragraphs we are meant to follow the PEEL structure then write evaluation para separately.
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meli77
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#8
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#8
Hi,

This is my first time attempting an essay style question in econ so I am finding this question hard.

I managed to write one PEEL paragraph. Could you please read it and give me some feedback? It would be a massive help! I have attached the extract if you need it.

Thank you so much!

With reference to Extract 1, discuss whether the demand for all cars is likely to be income elastic.

The demand for cars is falling and therefore it could be argued that the demand for all cars is likely to be income elastic. Income elasticity of demand is the sensitivity of demand for a product to a change in real income. In the extract, it states that ‘New car sales fell by 21.8%… in response to a 1% fall in real income’ which links to the 2008 recession. This means that straight after the recession, consumers didn’t have enough money to make purchases of luxury goods, which led to a decrease in their demand, suggesting that cars have a positive income elasticity of demand. (fall in real income causes a decrease in demand). Moreover, a decline in the demand for cars doesn’t only affect the car manufacturing company, but other nearby businesses too. Thus, this strengthens the view that the demand for all cars is likely to be income elastic because there is a sensitivity of the demand for cars due to a change in real income.
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Ayman11332
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#9
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Perhaps take out the third line and use it within your other sentences. e.g A fall in real income of 1%, which reduces disposable income for consumers, caused a fall in demand for new cars by 21.8%. Perhaps also calculate the YED and draw a graph if you have time. pick apart the question. 'All cars' is very broad and article only gives you data on new car sales. What about the used car market? are these also income elastic? You want to portray that you can separate the question into its key components. Try use specific economic terms, rather than 'enough money' perhaps they didn't have the necessary savings or income . New cars can also be taken on finance, maybe tighter lending conditions by banks during 2009 stopped people from being able to access finance? therefore maybe not as much of a luxury good as might be gathered from just the data given.

Hope this helps
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meli77
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#10
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#10
(Original post by Ayman11332)
Perhaps take out the third line and use it within your other sentences. e.g A fall in real income of 1%, which reduces disposable income for consumers, caused a fall in demand for new cars by 21.8%. Perhaps also calculate the YED and draw a graph if you have time. pick apart the question. 'All cars' is very broad and article only gives you data on new car sales. What about the used car market? are these also income elastic? You want to portray that you can separate the question into its key components. Try use specific economic terms, rather than 'enough money' perhaps they didn't have the necessary savings or income . New cars can also be taken on finance, maybe tighter lending conditions by banks during 2009 stopped people from being able to access finance? therefore maybe not as much of a luxury good as might be gathered from just the data given.

Hope this helps
omg thank you so much
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econhelp525
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#11
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#11
(Original post by meli77)
Hi thank you so much. Our teacher gave us this question. It is out of 10 but you are meant to write 3 paragraphs we are meant to follow the PEEL structure then write evaluation para separately.
Oh, because I googled the question and it was a 2010 paper, and it was a 6 mark question.

Your paragraph is too long, then. You can't write 3 of them plus an evaluation for a 10 mark question, it should be more concise. I don't know, I'd need to see an actual new style paper, because I don't know how you're supposed to stretch an old style 6 mark question out that much lol
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meli77
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#12
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#12
no i think sir wants 2 analytical paras and 1 evaluation para
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godemperor
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#13
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#13
(Original post by meli77)
Hi,

This is my first time attempting an essay style question in econ so I am finding this question hard.

I managed to write one PEEL paragraph. Could you please read it and give me some feedback? It would be a massive help! I have attached the extract if you need it.

Thank you so much!

With reference to Extract 1, discuss whether the demand for all cars is likely to be income elastic.

The demand for cars is falling and therefore it could be argued that the demand for all cars is likely to be income elastic. Income elasticity of demand is the sensitivity of demand for a product to a change in real income. In the extract, it states that ‘New car sales fell by 21.8%… in response to a 1% fall in real income’ which links to the 2008 recession. This means that straight after the recession, consumers didn’t have enough money to make purchases of luxury goods, which led to a decrease in their demand, suggesting that cars have a positive income elasticity of demand. (fall in real income causes a decrease in demand). Moreover, a decline in the demand for cars doesn’t only affect the car manufacturing company, but other nearby businesses too. Thus, this strengthens the view that the demand for all cars is likely to be income elastic because there is a sensitivity of the demand for cars due to a change in real income.
how many marks does the question give.?
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meli77
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#14
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#14
(Original post by godemperor)
how many marks does the question give.?
10 i am meant to write 2 paragraphs
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godemperor
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#15
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#15
(Original post by meli77)
10 i am meant to write 2 paragraphs
yea for 10 marker you will need to write more and you should evaluate as well
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