CAIE IGCSE Economics 2.5.1 Causes of Price Changes Questions
Practise Cambridge IGCSE Economics by analysing how market shocks shift demand or supply and change equilibrium outcomes.
- Syllabus
- 2027–2029
- Course
- Economics 0455
Exam points
- Explain how changes in demand or supply alter market equilibrium.
- Use demand and supply diagrams to identify new equilibrium price and quantity.
- Analyse how market shocks affect prices, quantities and equilibrium outcomes.
CAIE IGCSE Economics 2.5.1 Causes of Price Changes Questions question 1
[Maximum number: 6]
In the first half of 2022, Guyana's GDP grew by 36.4%. Most of this growth was due to higher output in the primary sector. The government used some of the tax revenue generated from this growth to fund long-run development projects such as infrastructure and education. However, in the short run, there was a rise in house prices.
Analyse why house prices may increase.
Analyse why house prices may increase.
Coherent analysis which might include the following.
Increase in demand (1) due to lower interest rates (1) increasing borrowing for house purchases (1) higher population (1) higher incomes (1) increasing ability to purchase houses (1) higher confidence (1) increasing willingness to buy houses (1).
Decrease in supply (1) reduction in subsidies on new house building (1) increased taxation on housing (1) government building fewer houses (1) stricter planning regulation (1) land is used for other things e.g. infrastructure (1).
Increasing cost of production of new houses (1) cost of labour (1) cost of raw materials (1) cost of land (1) increased costs passed on to buyers of houses as higher prices (1).
Less government intervention (1) removal of price controls (1).
6
MAXIMUM 4 MARKS for identification of reasons without analysis in terms of demand and / or supply.
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