Mark Scheme

Candidate defines elasticity of demand – 1 mark

Candidate correctly identifies that luxury handbags will be likely to be elastic goods – 1 mark

Candidate explains that with elastic goods as incomes fall demand would fall by a greater amount – 2 marks

Candidate describes that this will decrease revenues for the business – 1 mark

Candidate makes a judgement as to the impact on the business – decreases revenue / profit - 1 mark