Supply

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

May/June 2015

When new oil reserves are found, what has risen in supply?

May/June 2015

The diagram illustrates the market for fresh fish in the Caribbean and equilibrium point X. A new type of fishing boat increases output, which lowers costs. Which point shows the new equilibrium?

May/June 2015

A government imposes a tax on car production. What is most likely to fall?

May/June 2016

By 2014, government subsidies given to the Chinese steel industry resulted in 200 million tonnes of surplus output. The diagrams illustrate the market for Chinese steel. Which diagram would show the situation after the subsidy but before the market had adjusted?

May/June 2016

A government imposes a tax on car production. What is likely to fall?

May/June 2016

Vanilla is an input in making soft drinks, cakes and perfumes. Even so, its chief application is in ice cream production. Fig. 1 displays the varied costs involved in producing ice cream for one firm. Madagascar is the world’s biggest supplier of vanilla, with Mexico and Tahiti next. At the beginning of 2016, economists anticipated that ice cream prices would rise because the price of vanilla had increased by 130% in 2015. This was mainly the result of poor harvests in Madagascar, which lowered vanilla output in 2015. In most countries, ice cream is regarded as a luxury item. It has many substitutes, and this is one reason producers do not always fully pass higher costs on to customers. In 2015, several other changes also affected ice cream production, including an increase in worker productivity. Besides vanilla, Madagascar produces various other primary products, including coffee and sugar. Nearly 80% of the country’s labour force works in the primary sector. The country has a relatively low Gross Domestic Product (GDP) per head and a relatively low Human Development Index (HDI) value, as shown in Table 1. This restricts the amount people in Madagascar are able to save. Half of Madagascar’s population lives in poverty. The government is attempting to cut poverty by introducing a programme of cash benefits. It is hoped that one outcome will be higher school enrolment and attendance among children from poor families. To raise economic growth, the government has sold several state-owned enterprises and is shifting the economy towards a market system.

May/June 2018

Floods damaged a large quantity of the country’s agricultural products. What is likely to have happened to the price of agricultural products and the volume of imports of agricultural products?

May/June 2019

A substantial proportion of a country’s agricultural products was damaged by floods. What is likely to have happened to the price of agricultural products and to the volume of imports of agricultural products?

May/June 2019

What factor would cause a rise in quantity supplied by moving up the supply curve for rice?

May/June 2023

The diagram illustrates a movement of the supply curve for New Zealand’s airlines from S$_1$ to S$_2$. What is the most likely reason for this change?

May/June 2024

The diagram illustrates the demand and supply curves for a product at its equilibrium price $P$. How would the introduction of a subsidy be represented?

May/June 2025

During August 2013, a prolonged strike in north-east India, the region where the best and most costly Darjeeling tea is produced, brought the tea industry to a halt at the time of harvest. On a demand and supply diagram for Darjeeling tea, what is the most probable effect of this situation?

Oct/Nov 2015

A government provides farmers with a subsidy of $5$ per kilo in order to supply food in the open market, where $X$ marks the original equilibrium position. The outcome is shown in the diagram. What will be the new equilibrium price and the quantity supplied after the subsidy?

Oct/Nov 2016

When a government gives a subsidy for pineapple production, this is likely to

Oct/Nov 2016

A government gives a subsidy to pineapple production. This is likely to

Oct/Nov 2016

Over the last few years, the world market price of crude oil has dropped sharply. One reason is the rise in oil produced through the new extraction method of fracking. How is this represented on a demand and supply diagram of the market for crude oil?

Oct/Nov 2017

In 2014, world Gross Domestic Product (GDP) amounted to US$78000 billion. One year later, it had risen to US$80730 billion. In earlier years, countries such as the USA and Germany may have been thought likely to make the biggest contribution to growth in GDP. China represented 20% of the rise in world output in 2015. China is expected to become the largest economy. It is becoming a more powerful rival in several markets. This stronger price competitiveness results from a range of factors, including keeping the exchange rate low, giving subsidies to a number of industries and improving labour productivity. However, in 2015 the Chinese Government was thinking about whether to shrink the country’s steel industry, perhaps by reducing the subsidy it received. Fig. 1 illustrates how the steel market could be influenced by such a change. Some developed countries have recently been facing difficulties. For instance, Australia has experienced a decline in its economic growth rate. In an attempt to raise domestic economic activity, the Reserve Bank of Australia has lowered interest rates. The economic growth rates of developing and emerging economies are rising. In Africa, this is partly due to the discovery and use of oil and mineral resources. These countries use different exchange rate systems and have different levels of success in attracting multinational companies. Many African countries use protectionist policies, although some are shifting towards free trade. In most developing and emerging economies, the birth rate is falling. The effect of this shift depends on how large the decline is. For example, Nauru is one of the smallest countries in the world and has a population of only 10000. Its birth rate dropped from 26 to 25 in 2015.

Oct/Nov 2017

Which factors can make the supply curve of a product move to the right?

Oct/Nov 2019

A product has experienced an upward movement along its supply curve. What is the most likely reason for this?

Oct/Nov 2019

A government reduced the tax applied to all goods manufactured within its own country. What is the most likely effect of this?

Oct/Nov 2020

An economy depends on potash for producing fertiliser. A new potash deposit is found. Which diagram illustrates this change in the market for potash?

Oct/Nov 2021

The diagram illustrates a movement of the supply curve for New Zealand’s airlines from $S_1$ to $S_2$. What has caused this change?

Oct/Nov 2021

Workers receive a pay increase, yet their productivity does not rise. The workers themselves do not purchase the product they make. How would this change be represented on a demand and supply diagram for the product?

Oct/Nov 2022

A spell of poor weather causes the rice crop to fail. What happens to the market for rice?

Oct/Nov 2024

The table displays the supply of a product at different prices. If the price rises from 12 to 14, what change will occur in supply?

Oct/Nov 2024

Read the source material thoroughly before you answer Question 1. Source material: Changes in the Malawian economy Malawi is a low-income country in East Africa. It is frequently struck by natural disasters, including droughts, floods and storms. In January 2022, Storm Ana hit Malawi. This damaged agricultural crops, factories, forests and power stations. More than three-quarters of Malawi’s labour force work in agriculture. Two of the country’s major crops are tea and sugar. The quantity of tea supplied for sale is influenced by weather conditions, government subsidies and the price of fertilisers. The world market for sugar has been affected by health reports that identified the possible harmful effects of consuming too much sugar. Three of the Malawian Government’s priorities are to develop new industries, improve education standards and create more sustainable sources of energy. The proportion of Malawian children who complete their primary education (5-11 years of age) is relatively low. Table 1.1 shows GDP per head and the percentage of children who complete primary education in selected countries in 2022. Only a small share of Malawi’s population has access to electricity. Most households depend on wood and charcoal for cooking and heating. Using wood as a fuel contributes to the destruction of the country’s forests and lowers air quality. However, the country receives 3000 hours of sunshine a year. This means it could develop solar energy. There would be an initial expense to install solar panels and to reduce the risk of storm damage. Solar energy plants (also known as solar farms) can take up a large area and cause visual pollution. Even so, a successful solar energy industry could reduce Malawi’s imports of fuel and might affect its exchange rate. Malawi’s foreign exchange rate fell in 2022. The country’s currency, the kwacha, bought fewer US dollars. This depreciation affected Malawi’s current account of the balance of payments, its inflation rate and its economic growth rate. Some economists suggested that the Malawian Government should prevent the kwacha from falling further in value.

Oct/Nov 2025