Price determination

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 point in the market?

May/June 2015

Newspaper reports have said that demand for beef has fallen, while its price per kilogram has risen. Beginning at the original equilibrium point X, which point on the diagram shows the updated market equilibrium?

May/June 2015

During 2013, house prices increased in China but declined in Greece. The Chinese Government attempted to slow the increase in house prices by discouraging borrowing. In Greece, the equilibrium price of houses dropped, mainly as a result of lower income. In some countries, governments provide subsidies to housebuilders in order to affect the market for houses.

May/June 2015

The diagram illustrates the demand for, and supply of, places in independent (private) schools that charge fees. The equilibrium point is X. The costs faced by independent (private) schools increase. In addition, a report is published saying that Government schools obtain very good examination results. What is likely to be the new equilibrium point?

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 market for a product. Which of the following statements about the points shown on the diagram is correct?

May/June 2017

The government lifts the rate of income tax and reduces the rate of a sales tax (VAT). Starting from the initial equilibrium point X, which letter shows the new equilibrium point in a market for normal goods?

May/June 2017

From the diagram, suppliers have fixed the price of a product at $P_S$. Economic theory suggests that the equilibrium price of the product will increase to $P_E$. What is the reason for this change in price?

May/June 2018

A newspaper stated that ‘the world market for coffee has moved back into equilibrium’. Which situation would support this claim?

May/June 2019

The diagram illustrates the market for information technology (IT) graduates. At first, the equilibrium was X. Afterwards, an increase in the number of IT students graduating from university and wider use of artificial intelligence (AI) raised the demand for IT staff. What is the new equilibrium?

May/June 2021

The diagram illustrates the demand and supply of apples. To what degree is the apple market in disequilibrium when the price is $2.50$ per kilo?

May/June 2022

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

May/June 2022

A government imposes a specific tax on the supply of cigarettes. At the same time, it launches a campaign to explain the health risks of smoking cigarettes. Which diagram shows the effect on the demand and supply of cigarettes?

May/June 2022

Which statement identifies a market that is in disequilibrium?

May/June 2024

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

May/June 2024

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

May/June 2025

The table gives the number of units of coffee demanded each day and the number supplied each day. At the equilibrium price, what is the total amount spent 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 in the hot weather, what was likely to happen in the market for ice cream?

May/June 2025

What does the term equilibrium price mean?

Oct/Nov 2015

The market for a good was initially in equilibrium. Then a change led to a new equilibrium where the price of the good was higher and the quantity traded was lower. What change could have brought this about?

Oct/Nov 2016

The market for a product had been 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 change could have brought this about?

Oct/Nov 2016

A report stated that oil supply would be influenced by the discovery of new oil fields, while demand would be influenced by fast worldwide economic expansion. If point X is the starting equilibrium, which point might show the revised equilibrium?

Oct/Nov 2017

The diagram represents the market for a clothing-producing firm, with the starting equilibrium at X. What would the new equilibrium be if a competitor carries out a successful advertising campaign and workers’ wages rise?

Oct/Nov 2018

A government wants to raise output and expand steel sales by giving subsidies to private producers. Each tonne receives a subsidy of $W - Z$. Using the diagram, what is the value of sales of steel after the subsidy?

Oct/Nov 2018

The diagram illustrates the world market for copper, where the equilibrium point is X. Which point shows the new equilibrium after the copper producers’ costs increase and global economic growth accelerates?

Oct/Nov 2020

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

Oct/Nov 2022

In a country, shoppers become concerned about a sudden and harmful increase in air pollution, so they purchase more food in case they need to remain indoors. As the air pollution becomes more widespread, supermarket workers become ill and supermarkets find it hard to keep their shelves stocked with food. X was the original equilibrium in the supermarket food market. What will be the new equilibrium resulting from this situation?

Oct/Nov 2022

Washington State is the US state that produces the highest number of apples. In 2019, apple output rose in Washington State, yet the market was still in disequilibrium. Apple farming is labour-intensive because apples are harvested by hand. The US apple market is competitive.

Oct/Nov 2022

When the weather is favourable, the demand for tomatoes rises, and the supply of tomatoes rises as well. What is certain to happen as a result?

Oct/Nov 2023

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

Oct/Nov 2024

A city centre has a number of cafés that sell snacks and drinks. A few of these cafés shut down because their owners retire. What is the most likely impact on the prices and profits of the cafés that remain?

Oct/Nov 2024

A reduction in which variable would help to eliminate a market shortage?

Oct/Nov 2024

The diagram illustrates the supply and demand curves for a good. The starting market equilibrium is shown at point E₁. A shift in the market then results in a new equilibrium at E₂. What is the cause of the shift in the market equilibrium?

Oct/Nov 2025

The diagram illustrates the market for fresh fish in the Caribbean, where the equilibrium is at point X. A new type of fishing boat raises production and so lowers costs. Which point indicates the new equilibrium?

Oct/Nov 2025

The table presents the market schedule for good X. If quantity supplied rises by 50% at every price, what equilibrium price and quantity will result?

Oct/Nov 2025

The diagram illustrates the equilibrium price for bread. What will be the short-term effect if the government imposes a maximum price below $5?

Oct/Nov 2025

Some markets in Belgium are already in equilibrium. The country makes a broad variety of goods and services that have different levels of price elasticity of demand. The Belgian Government wants the economy to move to a production possibility point beyond its present production possibility curve (PPC). One industry performing strongly is Belgium’s scientific industry. The workers in this industry are highly specialised.

Oct/Nov 2025