Economics · Oct / Nov 2020 · Paper 13 · Question 7

In an African country with large areas of tropical desert the price elasticity of demand for salt is highly inelastic. This will result in greater consumer expenditure on salt when price changes from P1 to P2. Which diagram illustrates this situation?

1. ADiagram A: price of salt on vertical axis, quantity on horizontal axis, downward-sloping demand curve D, with P2 above P1
2. BDiagram B: price of salt on vertical axis, quantity on horizontal axis, flatter downward-sloping demand curve D, with P2 above P1
3. CDiagram C: price of salt on vertical axis, quantity on horizontal axis, horizontal demand curve D at P1, with P2 above P1
4. DDiagram D: price of salt on vertical axis, quantity on horizontal axis, steep downward-sloping demand curve D, with P2 above P1

As printed in the paper