IB Economics HL 2.3.2 Changes in equilibrium and market adjustment Question Bank

Practise IB Economics HL 2.3.2 by analysing linked demand-and-supply shifts, disequilibrium and equilibrium adjustment.

Exam points

Analyse simultaneous demand and supply changes and identify the possible equilibrium outcomes.
Explain how excess demand or supply creates pressure for price adjustment.
Evaluate the effect on revenue, welfare or affordability using diagram and case evidence.

[Maximum number: 4]

Note that widgets and pidgets are imaginary products.

In the country of Burbia, the demand and supply of widgets are given by the functions

\begin{aligned} & Q d=249-4 P \\ & Q s=150+14 P \end{aligned}

where Qd is the quantity demanded per month, Qs is the quantity supplied per month and P is the price per widget in dollars ($).

(a)

Calculate the excess demand/excess supply (state which of these) at a price of $\$8.50$ .

[ 2 ]

$\mathrm{Qd}=249-4 \times 8.50=215$
Qs $=150+14 \times 8.50=269$

Any valid working is sufficient for [1].
There will be excess supply or a surplus of 54 .

An answer of 54 (without working) is sufficient for [1].

(b)

Calculate the price at which excess demand of 18 widgets would result.

A demand curve is drawn under the assumption of ceteris paribus.

[ 2 ]

Calculate the price at which excess demand of 18 widgets would result.
249-4 P=150+14 P+18
81=18 P

Any valid working is sufficient for [1].
$P=\$4.50$

An answer of 4.50 (without working) is sufficient for [1].

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2.3.2—Changes in equilibrium question 1

Question (a)

Question (b)