Price determination — Paper 1 · IGCSE Economics 0455

14 The world price of cocoa has been falling while the prices of products made from cocoa have been rising. Which combination might explain this? advertising expenditure market for cocoa on products made from cocoa A excess demand decrease B excess supply decrease C excess demand increase D excess supply increase

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2004

9 The price of a good is temporarily above the market equilibrium price. What must happen for the market to be brought back to equilibrium? quantity demanded quantity supplied A rises rises B rises falls C falls rises D falls falls

1 marks

Answer: B

This question in 0455/11 May/June 2006

11 The diagram shows the supply and demand curves for a good. The market is in equilibrium at point X. supply V W T X price Y Z demand O quantity What would be the excess supply at price T? A TV B VW C VZ D WY

1 marks

Answer: B

This question in 0455/11 May/June 2006

9 The demand for and supply of a good both change. As a result the price of the good rises but the quantity traded remains the same. What must have happened to demand and supply? demand supply A fallen fallen B fallen risen C risen fallen D risen risen

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2006

12 The diagram shows the demand for and the supply of mobile (cell) phones. The market is in equilibrium at point X. What would be the most likely new equilibrium if the government placed an indirect tax on mobile (cell) phones while reducing income tax? S2 S1 C B D price A X D3 D1 D2 O quantity

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2006

19 The table shows the quantity of coffee demanded per day and the quantity supplied per day. price ($) per kilo demand (kilos) supply (kilos) 12 16 26 11 18 23 10 20 20 9 22 17 8 24 14 7 26 11 At the equilibrium price, what will be the total expenditure on coffee? A $10 B $20 C $200 D $400

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2006

12 The table shows demand and supply schedules for a commodity. price quantity demanded quantity supplied ($ per tonne) (tonnes per month) (tonnes per month) 20 400 1600 18 480 1200 16 600 600 14 800 480 12 1200 320 What is the equilibrium price? A $20 B $18 C $16 D $14

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2007

10 Due to good weather, there is a surplus in the market for an agricultural product. Which change would cause the market to return to equilibrium? A a decrease in demand B a fall in price C an increase in supply D a rise in price

1 marks

Answer: B

This question in 0455/11 May/June 2008

13 Which diagram best represents the market for tickets for a world famous tennis tournament? A B S S price price D D O quantity O quantity C D S price price S D D O quantity O quantity

1 marks

Answer: C

This question in 0455/11 May/June 2008

40 The government of a major oil-exporting country decides to extract more oil and export it as rapidly as possible. What is the likely effect of this on the volume of oil exports and the price of oil? volume of oil exports price of oil A fall immediately fall in the long term B fall in the long term rise immediately C rise immediately fall immediately D rise in the long term rise in the long term

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2008

6 The diagram shows an initial equilibrium point (X) in a market and a new equilibrium point (Y). Y X price O quantity Which combination of changes in demand and supply could have caused the movement from X to Y? demand supply A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2009

22 In 2008 inflation was close to 100 000 % in Zimbabwe. In a bid to reduce this high rate, the Zimbabwean Government imposed maximum prices on a range of products. This caused price rises amongst those goods sold unofficially or illegally. What could explain this? A The maximum prices increased demand whilst reducing supply. B The maximum prices reduced demand whilst increasing supply. C The maximum prices were set above the equilibrium price levels. D The maximum prices were set at the equilibrium price levels.

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2009

16 South African companies are planning to undertake major investment in Zimbabwe in order to mine platinum. If this investment occurs, what would happen in the short term to the supply of platinum, the price of platinum and the profits of the companies? supply curve price of platinum profits of the companies A no change rise rise B shift to left no change fall C shift to right rise rise D shift to right fall uncertain

1 marks

Answer: D

This question in 0455/11 May/June 2010

7 The diagram shows the demand for and the supply of bread. S price P1 D O quantity A maximum price P1 is fixed by the government. What is likely to be the immediate result of this? A a movement of the demand curve to the right B a movement of the supply curve to the right C a shortage of bread D a surplus of bread

1 marks

Answer: C

This question in 0455/12 May/June 2010

8 The diagram shows a market for wheat that is in equilibrium. T S X price V W D O Y Z quantity Which area represents the total revenue for wheat farmers? A OTXY B OVXZ C OVXY D OWXY

1 marks

Answer: C

This question in 0455/12 May/June 2010

17 South African companies are planning to undertake major investment in Zimbabwe in order to mine platinum. If this investment occurs, what would happen in the short term to the supply of platinum, the price of platinum and the profits of the companies? supply curve price of platinum profits of the companies A no change rise rise B shift to left no change fall C shift to right rise rise D shift to right fall uncertain

1 marks

Answer: D

This question in 0455/12 May/June 2010

5 The diagram shows that when a tax of $2 on a good raises the supply curve from S1 to S2, the price to the consumer rises from $4 to $5. S2 S1 price 5 $ 4 3 D 0 75 100 quantity What is the total tax yield to the government? A $75 B $150 C $200 D $375

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2010

5 The table illustrates the demand and supply for rice in a market in Africa. price per kg ($) quantity demanded (kg) quantity supplied (kg) 10 50 10 20 40 20 30 30 30 40 20 40 When the price rises from $20 to $30 per kg, what is the approximate price elasticity of demand for rice? A 0.25 B 0.5 C 1.0 D 2.0

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2010

6 The diagram shows that when a tax of $2 on a good raises the supply curve from S1 to S2, the price to the consumer rises from $4 to $5. S2 S1 price 5 $ 4 3 D 0 75 100 quantity What is the total tax yield to the government? A $75 B $150 C $200 D $375

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2010

5 The table shows the changes in two influences on the demand for and supply of televisions. If these two changes occurred at the same time, in which case is it impossible for the price of televisions to rise? consumers’ incomes costs of production A fall fall B fall rise C rise fall D rise rise

1 marks

Answer: A

This question in 0455/13 May/June 2011

7 Drought in African countries often results in poor harvests. Other countries then help by sending quantities of food. What are the likely results of these events for the price of food in the drought-affected countries? A It will fall and then rise. B It will rise and continue to rise. C It will rise and remain at this higher level. D It will rise and then fall.

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2011

8 Drought in African countries often results in poor harvests. Other countries then help by sending quantities of food. What are the likely results of these events for the price of food in the drought-affected countries? A It will fall and then rise. B It will rise and continue to rise. C It will rise and remain at this higher level. D It will rise and then fall.

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2011

9 What changes would move the equilibrium in the diagram from point X to a new point within area Z? S Z X price D O quantity A a decrease in demand with a decrease in supply B a decrease in demand with an increase in supply C an increase in demand with a decrease in supply D an increase in demand with an increase in supply

1 marks

Answer: C

This question in 0455/11 May/June 2012

9 The market for a normal good is in equilibrium at point X. Consumers’ incomes fall and the cost of producing the good rises. In which area of the diagram will the new equilibrium be? supply A price D X B C demand O quantity

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2012

10 On average, doctors earn more than bus drivers. Which change would be likely to reduce the earnings gap between doctors and bus drivers? A a decrease in the profits earned by bus companies B a decrease in the qualifications needed to be a doctor C an increase in demand for medical care D an increase in the number of people passing the driving test

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2012

4 In a pure market economy, which secondary factor determines the distribution of goods and services? A fairness to the consumer B needs of the consumer C price of the product D quality of the product

1 marks

Answer: C

This question in 0455/11 May/June 2013

23 The graph shows the impact of a tax on the supply of petrol (gas). D S2 S1 price O quantity What can be concluded from this graph? A the government will receive no tax revenue B the impact of the tax will be shared between the consumer and the producer C the impact of the tax will fall entirely upon the consumer D the impact of the tax will fall entirely on the producer

1 marks

Answer: C

This question in 0455/11 May/June 2013

23 The graph shows the impact of a tax on the supply of petrol (gas). D S2 S1 price O quantity What can be concluded from this graph? A the government will receive no tax revenue B the impact of the tax will be shared between the consumer and the producer C the impact of the tax will fall entirely upon the consumer D the impact of the tax will fall entirely on the producer

1 marks

Answer: C

This question in 0455/12 May/June 2013

13 In the 2016 Olympics in Brazil, the opening ceremony will take place in the Maracana Stadium, which can seat 82 000 spectators. It is expected that all tickets for the ceremony will be sold quickly, leaving many people dissatisfied. What can be concluded from this? A Price elasticity of demand for tickets will be perfectly elastic. B Some people will be able to resell their tickets at a higher price than they paid for them. C The Olympic authority will make more tickets available for sale. D This will be an example of market failure.

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2013

5 The diagrams show different conditions of demand and supply for a product. In which diagram would market price remain unchanged if consumers’ incomes fell? A B C D S D S S price price price price S D D D O quantity O quantity O quantity O quantity

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2013

15 Some lawyers charge very high rates per hour for their services. What best explains this? A The lawyers are very skilled. B The lawyers work long hours. C The lawyers work part-time and need a high hourly rate. D The law profession is a popular career.

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2013

30 Countries in Europe were in a recession in 2012. Usually a recession would mean oil prices fall. In fact in 2012, oil prices rose. Which international events might have explained these changes? possible causes of an oil possible causes of an oil price fall in the recession price rise in 2012 A European industrial China increased production declined its car production B India invested huge Japan’s economy amounts in road building had negative growth C Middle East conflicts made Saudi Arabia increased oil supplies uncertain oil production D new oil exploration in demand for alternative Poland was successful fuels increased

1 marks

Answer: A

This question in 0455/11 May/June 2014

24 Countries in Europe were in a recession in 2012. Usually a recession would mean oil prices fall. In fact in 2012, oil prices rose. Which international events might have explained these changes? possible causes of an oil possible causes of an oil price fall in the recession price rise in 2012 A European industrial China increased production declined its car production B India invested huge Japan’s economy amounts in road building had negative growth C Middle East conflicts made Saudi Arabia increased oil supplies uncertain oil production D new oil exploration in demand for alternative Poland was successful fuels increased

1 marks

Answer: A

This question in 0455/13 May/June 2014

6 What is meant by the equilibrium quantity in the market for a product? A the average quantity produced over the year B the average quantity sold over the year C the quantity at which profit occurs D the quantity at which the demand and supply curves intersect

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2014

11 In which occupations do wages tend to be lowest? A in those where the work is dangerous B in those where there is an excess supply of labour C in those where workers are paid on a monthly basis D in those where workers need long training

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2014

5 What is meant by the equilibrium quantity in the market for a product? A the average quantity produced over the year B the average quantity sold over the year C the quantity at which profit occurs D the quantity at which the demand and supply curves intersect

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2014

7 The diagram shows the market for refined oil with equilibrium of X. What will be the new equilibrium when a major oil refinery shuts down for repair work? S2 D2 S1 D1 A B S3 D3 X price C D O quantity

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2014

16 A government policy results in an increase in government spending and a fall in the market price of a good. What is the government policy? A the application of an indirect tax to a luxury good B the introduction of a subsidy to wheat farmers C the privatisation of health services D the setting of a minimum price for milk

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2014

10 A trade union and employers agree a minimum wage (W1) which is above the market equilibrium wage (W) for that industry. supply of labour W1 W wage demand for labour O Q labour employed What is the effect of paying the minimum wage (W1)? A demand for workers will exceed the supply B fewer workers will be employed C some workers will continue to be paid at wage W D workers will be less willing to work for the minimum wage

1 marks

Answer: B

This question in 0455/12 May/June 2015

5 In 2011, China’s steel mills bought more coal in order to increase their output. China is the world’s largest consumer of coal. How would this change be shown on a demand and supply diagram for coal? A a fall in price with a movement along the supply curve B a movement along the demand curve with a rise in price C a rise in price with a shift in the supply curve to the left D a shift in the demand curve to the right with a rise in price

1 marks

Answer: D

This question in 0455/13 May/June 2015

7 The diagram shows the market for fresh fish in the Caribbean with initial equilibrium point X. A new type of fishing boat increases production, which reduces costs. Which point represents the new equilibrium? S3 S1 S2 B A price X C D D2 D1 O quantity

1 marks

Answer: D

This question in 0455/13 May/June 2015

5 What is meant by an equilibrium price? A a government price that ensures fairness for all B a price that has no pressure to rise or fall C a price that maximises the profits of the producers D a price that maximises the satisfaction of the consumers

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2015

4 In a market there is a shortage of a good. What change would cause the market to come to an equilibrium? A a decrease in supply B a fall in price C an increase in demand D a rise in price

1 marks

Answer: D

This question in 0455/12 Feb/March 2016

10 In the diagram, D1D1 and S1S1 represent the demand for and the supply of labour. W indicates a legal minimum wage. An influx of immigrant labour causes the supply curve for labour to shift from S1S1 to S2S2. D1 S1 S2 W wage ($) S1 D1 S2 0 1 2 3 4 5 6 7 8 9 10 labour (millions) How many people will be employed if the minimum wage legislation is then abolished? A 4 million B 5 million C 6 million D 7 million

1 marks

Answer: D

This question in 0455/11 May/June 2016

15 The diagram shows the demand and supply of places in independent (private) schools which charge fees. The equilibrium position is X. The costs of independent (private) schools rise. Also a report is issued which states that Government schools achieve very good examination results. What is likely to be the new equilibrium position? C B price A X D O quantity

1 marks

Answer: A

This question in 0455/11 May/June 2016

7 The diagram shows the price of a product during year 1 and year 2. price ($) O year 1 year 2 Which changes in demand and supply are consistent with the price behaviour in year 2? demand supply A falls by 5% falls by 10% B falls by 10% falls by 5% C unchanged falls by 10% D rises by 15% falls by 5%

1 marks

Answer: B

This question in 0455/12 May/June 2016

10 In the diagram, D1D1 and S1S1 represent the demand for and the supply of labour. W indicates a legal minimum wage. An influx of immigrant labour causes the supply curve for labour to shift from S1S1 to S2S2. D1 S1 S2 W wage ($) S1 D1 S2 0 1 2 3 4 5 6 7 8 9 10 labour (millions) How many people will be employed if the minimum wage legislation is then abolished? A 4 million B 5 million C 6 million D 7 million

1 marks

Answer: D

This question in 0455/12 May/June 2016

15 By 2014, government subsidies for the Chinese steel industry led to 200 million tonnes of excess output. The diagrams show the market for Chinese steel. Which would represent the position after the subsidy but before the market adjusted? A B price price ($) ($) 0 100 300 0 100 200 400 output (million tonnes) output (million tonnes) C D price price ($) ($) 0 100 200 300 0 100 200 400 output (million tonnes) output (million tonnes)

1 marks

Answer: C

This question in 0455/12 May/June 2016

4 The market for a good was in equilibrium. A change occurred which resulted in a new equilibrium with a higher price for the good and a lower quantity traded. What change would have caused this? A the demand curve moved to the left B the demand curve moved to the right C the supply curve moved to the left D the supply curve moved to the right

1 marks

This question in 0455/12 Oct/Nov 2016

19 A government gives farmers a subsidy of $5 per kilo to supply food on the open market where X is the original equilibrium position. The effect is illustrated in the diagram. S3 S1 20 S2 X 15 price ($ per kilo) 10 D1 5 0 4 8 12 16 20 24 quantity supplied (000 kilos) What will be the new equilibrium price and quantity supplied as a result of the subsidy? equilibrium price quantity supplied ($ per kilo) (000 kilos) A 10 16 B 13 20 C 15 16 D 20 8

1 marks

This question in 0455/12 Oct/Nov 2016

4 The market for a good was in equilibrium. A change occurred which resulted in a new equilibrium with a higher price for the good and a lower quantity traded. What change would have caused this? A the demand curve moved to the left B the demand curve moved to the right C the supply curve moved to the left D the supply curve moved to the right

1 marks

Answer: C

This question in 0455/13 Oct/Nov 2016

5 The demand for cocoa beans is price-inelastic. What is most likely to decrease as a result of an increase in demand for cocoa beans? A price of cocoa bean products B production of cocoa beans C profits of cocoa bean producers D unemployment among cocoa bean farmers

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2016

18 A government taxes farmers $12 per kilo when they supply food on the open market where X is the original equilibrium position. The effect is illustrated in the diagram below. 50 S4 S3 S1 S2 40 X 30 price ($ per kilo) 20 D1 10 0 10 20 30 40 50 60 quantity supplied (000 kilos) What will be the new equilibrium price and quantity supplied as a result of the tax? equilibrium price quantity supplied ($ per kilo) (000 kilos) A 20 40 B 25 50 C 35 30 D 40 20

1 marks

Answer: C

This question in 0455/13 Oct/Nov 2016

6 The diagram shows a market for rice that is in equilibrium. price T S X V W D O Y Z quantity Which area represents the total revenue for rice farmers? A OTXY B OVXY C OVXZ D OWXY

1 marks

Answer: B

This question in 0455/12 Feb/March 2017

4 The diagram shows the market for a product. S price W X Z Y D O quantity Which statement about the points marked on the diagram is correct? A The distance from W to X shows a shortage of the product. B The distance from Z to Y shows a surplus of the product. C The movement from W to Y shows a fall in the quantity demanded of the product. D The movement from X to Z shows a fall in the quantity supplied of the product.

1 marks

Answer: D

This question in 0455/11 May/June 2017

7 In 2015 there was a significant fall in the world price of petrol (gasoline). What would not have been a cause of the price fall? A the continuing global recovery from the world economic recession B the increasing exploitation of US oil reserves C the re-entry of Iranian producers to the world oil market D the shorter journeys from using the new Suez Canal

1 marks

Answer: A

This question in 0455/12 May/June 2017

10 The government increases the rate of income tax and decreases the rate of a sales tax (VAT). From the initial equilibrium point of X, which letter indicates the new equilibrium point in a market for normal goods? price S1 B A S X S2 C D D1 D D2 O quantity

1 marks

Answer: D

This question in 0455/12 May/June 2017

29 In 2015, Russia banned the imports of food, such as milk, from the European Union (EU). Which outcomes are most likely to happen as a result? milk market price of milk profits of in Europe in Russia EU farmers A excess demand fall rise B excess demand rise rise C excess supply fall fall D excess supply rise fall

1 marks

Answer: D

This question in 0455/12 May/June 2017

11 What is the most likely reason why airline pilots earn more than agricultural workers? A Agricultural work is difficult. B Pilots work regular hours. C There is a surplus of agricultural workers. D There is no shortage of pilots.

1 marks

Answer: C

This question in 0455/13 May/June 2017

11 The diagram shows two curves. One is the demand for labour, the other is the supply of labour. A government fixes a minimum wage (MW) that must be paid by employers. wage W MW O labour employed What will be the effect of this minimum wage? A fewer workers will be employed B no change in the market equilibrium C no worker will be paid wage W D supply of labour will exceed demand

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2017

5 In the diagram, suppliers have set the price of a product at PS. Economic theory predicts that the equilibrium price of the product will rise to PE. S price PE PS D O quantity What is the reason for this movement in price? A Demand for the product will increase. B No more of the product can be supplied. C Some consumers are willing to pay higher prices. D Suppliers are facing rising costs.

1 marks

Answer: C

This question in 0455/11 May/June 2018

5 The diagram shows the equilibrium market price PE and quantity QE for rice in a country. price S P1 PE D O QE quantity Which government action could cause the market price for rice to become P1? A encouraging the export of rice from the country B imposing a maximum price below the market price for rice C providing a subsidy to farmers to produce more rice D reducing import tariffs on rice

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2018

18 A government aims to boost production and increase sales of steel by subsidising private producers. A subsidy equal to W – Z per tonne is paid. According to the diagram, what would be the value of sales of steel after the subsidy? price supply of steel (per tonne W supply after subsidy of steel) Z P P1 demand for steel O Q Q1 quantity (tonnes of steel) A OP × OQ B OP1 × OQ1 C WZ × OQ D WZ × OQ1

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2018

6 What is meant by the equilibrium price in the market for a good? A the average price paid by consumers B the price at which maximum profit is made C the price at which the producer breaks even D the price at which the supply and demand curves intersect

1 marks

Answer: D

This question in 0455/12 Feb/March 2019

6 A newspaper reported that ‘The world market for coffee has returned to equilibrium’. Which situation supports this statement? A A sequence of poor harvests resulted in shortages. B Decreased transport costs led to a surplus of supply. C Farmers matched demand by planting more coffee bushes. D The price of coffee was fixed between producers.

1 marks

Answer: C

This question in 0455/11 May/June 2019

30 A large amount of the agricultural products in a country were damaged by floods. What is likely to have happened to the price of agricultural products and the volume of imports of agricultural products? price of products volume of imports A fall fall B fall rise C rise fall D rise rise

1 marks

Answer: D

This question in 0455/12 May/June 2019

6 What is meant by equilibrium in a market? A where products offered for sale equal consumer demand B where profit is at the expected level C where the quantity of inputs equals the quantity of output D where total costs equal total revenue

1 marks

Answer: A

This question in 0455/13 May/June 2019

30 A large amount of the agricultural products in a country were damaged by floods. What is likely to have happened to the price of agricultural products and the volume of imports of agricultural products? price of products volume of imports A fall fall B fall rise C rise fall D rise rise

1 marks

Answer: D

This question in 0455/13 May/June 2019

6 The table shows the quantity demanded and supplied for a commodity at different prices. price quantity quantity ($) demanded supplied 10 100 800 9 210 700 8 400 600 7 500 500 6 600 400 What would happen to the equilibrium price if the quantity supplied increased by 200 units at each price? A It would decrease by $1. B It would decrease by $2. C It would increase by $1. D It would increase by $2.

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2019

29 A trade union succeeds in raising the wages in an industry above the current equilibrium wage. How would the demand and supply of labour change? change in quantity change in quantity of labour demanded of labour supplied A fall fall B fall rise C rise fall D rise rise

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2019

6 The diagram shows market demand and supply curves. S1 P2 price P1 P3 D1 O Q2 Q3 Q1 Q4 Q5 quantity To what extent is the market in disequilibrium at price P3? A OQ1 – OQ2 B OQ1 – OQ3 C OQ2 – OQ4 D OQ3 – OQ5

1 marks

Answer: D

This question in 0455/11 May/June 2020

27 What are the effects on price and equilibrium quantity of the imposition of an import tariff on a good? price equilibrium quantity A decreases decreases B decreases increases C increases decreases D increases increases

1 marks

Answer: C

This question in 0455/13 May/June 2020

6 The diagram shows the global market for copper with an equilibrium point of X. Which point represents the new equilibrium after the copper producers’ costs increase and there is rapid global economic growth? price S2 S1 A S3 D X B C D2 D1 D3 O quantity

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2020

7 The diagram shows the market for information technology (IT) graduates. The original equilibrium was X. Later, more IT students graduated from university and greater use of artificial intelligence (AI) increased the demand for IT staff. What is the new equilibrium? D1 D D2 wage S1 B ($) A S X C S2 D O quantity of labour

1 marks

Answer: C

This question in 0455/12 May/June 2021

11 The market equilibrium wage rate is $10 per hour. What explains why the wage rate actually paid is $12 per hour? A Employers are competing for labour. B The government sets a minimum wage of $12 per hour. C There is a surplus of skilled labour. D Workers have received unpaid training.

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2021

6 The diagram shows the demand and supply for apples. 3.00 S $ per kilo 2.50 2.00 1.50 1.00 D 0.50 0 0 200 400 600 800 1000 tonnes (000) To what extent is the market for apples in disequilibrium at a price of $2.50 per kilo? A Demand exceeds supply by 200 000 tonnes. B Demand exceeds supply by 400 000 tonnes. C Supply exceeds demand by 200 000 tonnes. D Supply exceeds demand by 400 000 tonnes.

1 marks

Answer: D

This question in 0455/11 May/June 2022

8 The table shows the demand and supply schedules for rice. The current price is $2.00 per kilo. quantity demanded quantity supplied price per kilo $ (million tonnes) (million tonnes) 2.50 5 30 2.00 10 25 1.50 20 20 1.00 30 15 0.50 40 10 What will happen if the price is reduced to $1.00 per kilo? A The demand schedule will shift to the left. B The market will move from shortage to surplus. C The market will move from surplus to shortage. D The supply schedule will shift to the right.

1 marks

Answer: C

This question in 0455/12 May/June 2022

6 The diagram shows the supply and demand for a product. S price $ 6 D 0 10 000 quantity (units) Suppliers have decided to produce 10 000 units and charge a price of $6. What is the result of this decision in the short run? A A stable equilibrium price will be achieved. B Suppliers will be left with unsold stock. C The equilibrium market price will increase. D There will be excess demand at the price of $6.

1 marks

Answer: B

This question in 0455/13 May/June 2022

6 The diagrams show changes in market conditions. Which diagram shows a shortage at price P? A B S S1 price price S2 P P D1 D2 D O Q1 Q2 O Q1 Q2 quantity quantity C D S1 S1 price price S2 S2 P P D D1 D2 O Q O Q1 Q2 quantity quantity

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2022

6 The shoppers in a country become worried about a sudden and dangerous rise in air pollution and so buy more food in case they have to stay at home. As the air pollution spreads, supermarket staff fall ill and the supermarkets struggle to keep their shelves full of food. X was the initial equilibrium in the market for food in supermarkets. What will be the new equilibrium as a result of the above situation? S3 S1 S2 price A of food D X B C D3 D1 D2 O quantity of food

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2022

4 The market for a good was in equilibrium. A change occurred which resulted in a new equilibrium with a higher price for the good and a lower quantity traded. Which change would have caused this? A The demand curve moved to the left. B The demand curve moved to the right. C The supply curve moved to the left. D The supply curve moved to the right.

1 marks

Answer: C

This question in 0455/12 Feb/March 2023

6 In a year when there were big increases in demand for new cars, many used cars also came onto the market. The diagrams show the demand for and the supply of new and used cars. The original equilibrium position was at E in each case. new cars used cars price S1 price S1 Y X S2 E E X D3 Y D2 D1 D1 D2 O quantity O quantity What will be the new equilibrium position in each market? new cars used cars A X X B X Y C Y X D Y Y

1 marks

Answer: D

This question in 0455/12 Feb/March 2023

9 The diagram shows the demand for and the supply of bread. price S P1 D O quantity A maximum price P1 is fixed by the government. What is likely to be the immediate result of this? A a movement of the demand curve to the right B a movement of the supply curve to the right C a shortage of bread D a surplus of bread

1 marks

Answer: C

This question in 0455/12 Feb/March 2023

5 What is a feature of a market in equilibrium? A demand exceeds supply B no profits are earned C the market will clear D there will be a surplus of products

1 marks

Answer: C

This question in 0455/13 May/June 2023

6 The markets of four products are all in equilibrium. The table gives the value of the price elasticity of supply (PES) for each product. The demand for each product shifts to the right by 5000 units at all prices. Which product will have the largest price increase? price elasticity of supply A 0 B 0.6 C 1.0 D 2.5

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2023

9 Good weather results in an increase in the demand for tomatoes. It also increases the supply of tomatoes. What must be a result of this? A The price of tomatoes will fall. B The price of tomatoes will rise. C The quantity of tomatoes traded will fall. D The quantity of tomatoes traded will rise.

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2023

10 What causes a change in the price of a product in a free market economy? A changes in demand and supply conditions B changes in external costs and external benefits C changes in government decisions D changes in the quantity of public goods

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2023

4 Which statement must be correct if a market is in disequilibrium? A Quantity demanded and quantity supplied are equal. B The government must intervene if anything is to be sold. C There can be no changes to demand or supply. D There is excess supply or excess demand.

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2023

9 In a market there is a surplus of a good. Which change would cause the market to come to an equilibrium? A a decrease in demand B a fall in price C a rise in price D an increase in supply

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2023

7 Which statement describes a market in disequilibrium? A Excess demand results from a government maximum price below the equilibrium price. B The point where the demand and supply curves cross. C Price changes cause further changes in both demand and supply. D The quantity demanded by consumers equals the quantity supplied by producers.

1 marks

Answer: A

This question in 0455/12 May/June 2024

9 Which government measure is most likely to cause a fall both in price and in quantity traded? A indirect tax B maximum price C minimum price D subsidy

1 marks

Answer: B

This question in 0455/12 May/June 2024

10 The diagrams show the wage rates of cleaners (OWc) and nurses (OWn). cleaners nurses wage S wage S rates rates Wn M M Wc D D O employment O employment What is the result if a national minimum wage of OM is introduced? wage rates wage rates of cleaners of nurses A fall rise B no change fall C rise fall D rise no change

1 marks

Answer: D

This question in 0455/12 May/June 2024

5 In the diagram, X represents the original equilibrium point in the labour market for engineers. An increase in the skills of engineers results in an increase in productivity. Which point represents the new equilibrium in the labour market for engineers? wage S2 A S1 B S3 X C D D3 D1 D2 O quantity of labour

1 marks

Answer: B

This question in 0455/13 May/June 2024

28 What are the effects on price and equilibrium quantity of the imposition of an import tariff on a good? equilibrium price quantity A decreases decreases B decreases increases C increases decreases D increases increases

1 marks

Answer: C

This question in 0455/13 May/June 2024

11 Bus drivers receive a wage of $15 000 a year. The government introduces a national minimum wage. Under which circumstances will the largest number of bus drivers become unemployed as a result of the minimum wage? national minimum demand for wage (per year) bus travel $ A 15 000 increasing B 15 000 unchanged C 18 000 increasing D 18 000 unchanged

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2024

4 A period of bad weather leads to a failure of the rice crop. What is the effect on the market for rice? A a shortage of rice and a fall in its price B a shortage of rice and a rise in its price C a surplus of rice and a fall in its price D a surplus of rice and a rise in its price

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2024

7 Which changes would move the equilibrium in the diagram from point X to point Z? S Z price X D O quantity A a decrease in demand with a decrease in supply B a decrease in demand with an increase in supply C an increase in demand with a decrease in supply D an increase in demand with an increase in supply

1 marks

Answer: C

This question in 0455/12 Oct/Nov 2024

6 A fall in which variable would help eliminate a market shortage? A quantity demanded B price C quantity supplied D the number of firms

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2024

16 There is a number of cafés selling snacks and drinks in a city centre. Several of these cafés close due to their owners retiring. What is the likely effect on the prices and profits of the remaining cafés? prices profits A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2024

5 Good weather results in an increase in the demand for and supply of peaches. How will this affect the price and quantity traded in the market for peaches? price of quantity of peaches peaches traded A fall fall B rise rise C rise uncertain D uncertain rise

1 marks

Answer: D

This question in 0455/11 May/June 2025

5 The table shows the quantity of coffee demanded per day and the quantity supplied per day. price ($) per kilo demand (kilos) supply (kilos) 12 16 26 11 18 23 10 20 20 9 22 17 8 24 14 7 26 11 At the equilibrium price, what will be the total expenditure on coffee? A $10 B $20 C $200 D $400

1 marks

Answer: C

This question in 0455/12 May/June 2025

5 The table shows the demand and supply schedules for rice. The current price is $2.00 per kilo. quantity demanded quantity supplied price per kilo $ (million tonnes) (million tonnes) 2.50 5 30 2.00 10 25 1.50 20 20 1.00 30 15 0.50 40 10 What will happen if the price is reduced to $1.00 per kilo? A The demand curve will shift to the left. B The market will move from shortage to surplus. C The market will move from surplus to shortage. D The supply curve will shift to the right.

1 marks

Answer: C

This question in 0455/13 May/June 2025

6 The diagram shows the market for a product. S U V P2 price P1 P3 X W D O Q3 Q1 Q2 quantity Which distance shows a market disequilibrium caused by excess supply? A U to V B U to X C V to W D X to W

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2025

9 The table shows the weekly demand for, and supply of, good X at three prices. price demand supply ($) (tonnes) (tonnes) 20 16 10 30 12 12 40 10 14 What will be the effect if the government imposes a minimum price of $40 per tonne? A a fall in the price of X B a shortage of X C a surplus of X D no change in the market equilibrium

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2025

12 The wages of school teachers are rising. What is least likely to be the cause of this? A decreased membership of teaching trade unions B increased awareness among parents about the importance of education C more restrictions on the immigration of teachers from other countries D the opening of new schools by the government

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2025

29 The US currently trades in oil with the UK. The discovery of new oil and gas deposits in the US will mean that its oil imports decrease and its oil exports increase. From the initial equilibrium point of X, which letter indicates the new equilibrium point for the US exchange rate? price of $ S1 B A S X S2 C D D1 D D2 O quantity of $

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2025

9 The diagram shows the equilibrium price for bread. S price ($) 5 D 0 quantity What will be the short-term effect if the government sets a maximum price below $5? A a shift in the demand curve B a shift in the supply curve C an excess of demand over supply D an excess of supply over demand

1 marks

Answer: C

This question in 0455/13 Oct/Nov 2025