Price determination

If a market is experiencing a shortage of a good. What change would bring the market into equilibrium?

Feb/March 2016

The diagram illustrates the market for oil. The starting equilibrium is $X$. If the amount of oil sold rose by two million barrels a day, which point indicates the new equilibrium?

Feb/March 2018

What does the term equilibrium price mean in the market for a good?

Feb/March 2019

Indian Railways is a state-owned enterprise that is owned and run by the Ministry of Railways. At present, India has only one railway line that is privately owned. The rail travel market is affected by movements in the markets for other types of transport. For example, shifts in the supply of oil and petrol affect the market for car travel.

Feb/March 2019

In 2018, the UK government brought in a tax on the production of sugary drinks. How would this change the market for sugary drinks, as illustrated on a demand and supply diagram?

Feb/March 2020

The diagram illustrates the market equilibrium $E$ for product $X$. Product $X$ has a demand curve that slopes downwards and a supply curve that slopes upwards. The price of a substitute good decreases. To which area of the diagram will the market equilibrium for product $X$ shift?

Feb/March 2021

The market for a good was initially in equilibrium. Then a change happened that led to a new equilibrium, with the good having a higher price and a smaller quantity bought and sold. Which change would have caused this?

Feb/March 2023

In a year with large rises in the demand for new cars, a lot of used cars also entered the market. The diagrams illustrate demand and supply for new cars and used cars. In each case, the initial equilibrium point was at E. What will the new equilibrium point be in each market?

Feb/March 2023

The diagram illustrates the demand for bread and the supply of bread. The government sets a maximum price $P_1$. What is the most likely immediate consequence of this?

Feb/March 2023

The diagram illustrates the demand and supply curves for a good. The market is at equilibrium at point $X$. What would the new equilibrium position be if there was a successful advertising campaign for the good and a rise in the cost of raw materials?

Feb/March 2025

The government lowers the income tax rate and raises the tax rate on producers. Starting from the original equilibrium point X, which letter shows the new equilibrium position in the market?

May/June 2015

Recent newspaper reports stated that demand for beef had fallen and that the price per kilogram had risen. Starting from the original equilibrium at X, which point on the diagram shows the new market equilibrium?

May/June 2015

In 2011, China’s steel mills purchased more coal so that they could raise their output. China is the world’s largest consumer of coal. How would this change be illustrated on a demand and supply diagram for coal?

May/June 2015

In 2013, house prices climbed in China but declined in Greece. The Chinese Government tried to slow the increase in house prices by discouraging borrowing. In Greece, the equilibrium price of houses dropped, mainly because income fell. In some countries, governments provide subsidies to housebuilders in order to shape the market for houses.

May/June 2015

The diagram illustrates the demand for and supply of places in fee-charging independent (private) schools. The equilibrium position is $X$. The costs faced by independent (private) schools increase. In addition, a report is published stating that Government schools achieve very good examination results. What is the most likely new equilibrium position?

May/June 2016

The diagram illustrates the market for rice. What might have led the equilibrium price to increase from $OP_1$ to $OP_2$?

May/June 2016

The diagram illustrates the demand and supply curves for a product. At first, the market is at equilibrium at point $X$. What would be the new equilibrium point if production costs declined and a rumour spread that the product might be unsafe in extreme weather conditions?

May/June 2016

The diagram illustrates the market for a product. Which statement about the labelled points on the diagram is correct?

May/June 2017

In the diagram, suppliers have fixed the price of a product at $P_s$. Economic theory predicts that the product’s equilibrium price will increase to $P_e$. What explains this change in price?

May/June 2018

The diagram illustrates the demand curve $D_1$ and supply curve $S_1$ for healthcare in an economy. The initial equilibrium is X. What will be the new equilibrium if the economy undergoes continuous economic growth and the government eases planning restrictions on constructing new hospitals?

May/June 2018

A newspaper stated that ‘The world market for coffee has returned to equilibrium’. Which situation would support this claim?

May/June 2019

What does equilibrium mean in a market?

May/June 2019

In February 2017, Europe had a shortage of fresh vegetables because of bad weather. For some time, the markets for several vegetables, such as broccoli and lettuces, were out of equilibrium. Food prices usually vary more than the prices of manufactured goods and services. These variations affect the inflation rate.

May/June 2019

The diagram illustrates the market for information technology (IT) graduates. The initial equilibrium was $X$. Afterwards, more IT students completed university and the wider use of artificial intelligence (AI) raised the demand for IT staff. What will the new equilibrium be?

May/June 2021

The diagram illustrates the market for oil. The initial equilibrium is X. Oil producers find a new source of oil at the same time as economic growth occurs. What is the new equilibrium?

May/June 2021

The diagram illustrates the demand and supply for apples. How far is the market for apples out of equilibrium when the price is $\$2.50$ per kilo?

May/June 2022

The table presents the world output of iron ore and the average yearly price for four years. What conclusion can be drawn about the link between world output of iron ore and the average yearly price over the four years?

May/June 2022

The diagram illustrates supply and demand for a product. Suppliers have chosen to make $10\,000$ units and set a price of $6. What will this decision lead to in the short run?

May/June 2022

What is one characteristic of a market in equilibrium?

May/June 2023

Which statement describes a market that is in disequilibrium?

May/June 2024

Which government policy is most likely to lead to a decrease in both price and quantity traded?

May/June 2024

Favourable weather causes both demand for and supply of peaches to rise. What effect will this have on the price and quantity traded in the market for peaches?

May/June 2025

The table shows the quantity of coffee demanded each day and the quantity supplied each day. At the equilibrium price, what is the total expenditure on coffee?

May/June 2025

The diagram illustrates the market for ice cream and the impact of very hot weather. If prices had stayed at $P_1$ even throughout the hot weather, what was likely to have occurred in the market for ice cream?

May/June 2025

The diagram illustrates the market for cherries in Chile. What would lead to the market equilibrium shifting from $E_1$ to $E_2$?

May/June 2025

The government in a wealthy country stated that it would provide free food to its citizens for one year. What would be the effect of this policy?

Oct/Nov 2015

What does the term equilibrium price mean?

Oct/Nov 2015

Frequent electricity shortages often lead to power cuts in the Lebanon. If the Lebanese economy keeps expanding, the daily difference between supply and demand could widen. The Lebanese Government plans to construct more power stations, although there is a danger that the social costs of running them may exceed the social benefits.

Oct/Nov 2015

A market for a product was originally in equilibrium. Then a change took place, leading to a new equilibrium with a higher price for the product and a smaller quantity traded. What alteration could have led to this?

Oct/Nov 2016

The market for a good was originally in equilibrium. A shift then took place, leading to a new equilibrium in which the good’s price was higher and the quantity traded was lower. What change could have brought this about?

Oct/Nov 2016

From 2005 to 2015, the number of late-night music clubs in the UK decreased from 3144 to 1733. It was claimed that this happened because planning regulations raised clubs’ costs and because social media provided more alternative ways of meeting people. How would the impact of these causes be represented on a demand and supply diagram for admission to late-night music clubs?

Oct/Nov 2017

The report stated that the supply of oil would be influenced by the discovery of new oil fields, and demand would be influenced by rapid worldwide economic growth. If point X is the original equilibrium point, which point might show the new equilibrium?

Oct/Nov 2017

The diagram illustrates the market for a firm producing clothing, with the starting equilibrium at X. What would the new equilibrium be if a rival firm runs a successful advertising campaign and workers’ wages rise?

Oct/Nov 2018

The table gives the quantity demanded and the quantity supplied of a commodity at various prices. What would happen to the equilibrium price if the quantity supplied rose by 200 units at each price?

Oct/Nov 2019

The diagram illustrates the worldwide copper market, where the equilibrium is at X. After copper producers’ costs rise and the world economy grows quickly, which point shows the new equilibrium?

Oct/Nov 2020

The diagrams illustrate changes in market conditions. Which diagram indicates a shortage at price $P$?

Oct/Nov 2022

Consumers in a country become concerned about a sudden and severe increase in air pollution, so they purchase extra food in case they need to remain indoors. As the air pollution spreads, supermarket workers fall ill and the supermarkets find it difficult to keep their food shelves stocked. X was the starting equilibrium in the market for food in supermarkets. What will the new equilibrium be as a result of the situation described above?

Oct/Nov 2022

In the United Kingdom (UK), the cost of timber used for house building rose. This was caused by a surge in the UK house building industry and a lack of drivers available to transport the timber. What change occurred in the UK timber market that led to this rise in price?

Oct/Nov 2023

Fine weather causes the demand for tomatoes to rise. It also causes the supply of tomatoes to rise. What must be the consequence of this?

Oct/Nov 2023

Which statement has to be true if a market is not in equilibrium?

Oct/Nov 2023

In a market, there is a surplus of a good. Which change would bring the market to equilibrium?

Oct/Nov 2023

What changes would cause the equilibrium shown in the diagram to shift from point X to point Z?

Oct/Nov 2024

In the centre of a city, several cafés sell snacks and drinks. Some of these cafés close because their owners retire. What is the likely effect on the prices and profits of the cafés that stay open?

Oct/Nov 2024

The table lists the quantities of tomatoes demanded and supplied at various prices. The starting equilibrium occurs at a price of $40$. In the next year, improved harvesting raises supply by $50\%$ at every price. What will happen to the suppliers’ total revenue?

Oct/Nov 2024

The diagram represents the market for a product. Which distance indicates a market disequilibrium resulting from excess supply?

Oct/Nov 2025

The table presents the weekly demand for, and supply of, good X at three prices. What effect will result if the government sets a minimum price of $40$ per tonne?

Oct/Nov 2025

The diagram illustrates the supply and demand curves for a product. The original market equilibrium is at point $E_1$. A market change results in a new equilibrium at $E_2$. What caused the shift in market equilibrium?

Oct/Nov 2025

The diagram illustrates the Caribbean market for fresh fish with equilibrium at point X. A new kind of fishing boat raises output, lowering costs. Which point shows the new equilibrium?

Oct/Nov 2025

The table sets out the market schedule for good X. The prices and quantities are as follows: price 10, quantity supplied 400, quantity demanded 100; price 9, quantity supplied 300, quantity demanded 200; price 8, quantity supplied 200, quantity demanded 300; price 7, quantity supplied 100, quantity demanded 400. If the quantity supplied increases by 50% at each price, what will the equilibrium price and quantity become?

Oct/Nov 2025

The diagram illustrates the equilibrium price of bread. What would be the short-term impact if the government imposed a maximum price below $5?

Oct/Nov 2025