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Edexcel IGCSE Economics 1.1.3 demand, supply and equilibrium

Practise demand-and-supply questions by drawing shifts, calculating shortages or surpluses and applying market data to equilibrium changes.

Syllabus
First assessment 2019
Course
Economics 4EC1

Exam points

  • Draw and label demand or supply shifts and show the new equilibrium price and quantity.
  • Calculate excess demand from a table and explain how price changes remove shortages.
  • Apply market data to analyse how substitutes, weather or popularity shift curves.

Covered syllabus points

1.1.3.a Demand1.1.3.b Movements and shifts on demand curves1.1.3.c Factors that shift demand1.1.3.d Supply1.1.3.e Movements and shifts on supply curves1.1.3.f Factors that shift supply1.1.3.g Equilibrium price and quantity and how they are determined1.1.3.h Market equilibrium, excess demand and excess supply diagrams1.1.3.i Calculating and drawing excess demand and excess supply1.1.3.j Market forces removing excess demand or supply

1.1.3 Demand, supply and market equilibrium question 1

[Maximum number: 5]

Question (a)

(a)

What is meant by the term demand?

[ 2 ]

Question (b)

(b)

Using the diagram below, draw the effects on the market for crops after a hurricane destroys farm land. Label the new curve, new equilibrium price and new equilibrium quantity.

Figure 2

Figure 2

[ 3 ]

1.1.3 Demand, supply and market equilibrium question 2

[Maximum number: 5]

Question (a)

(a)

Figure 1 below shows a change in demand for tickets to a sporting event.

Figure 1

Figure 1

Which one of the following statements is true?

A

When the price falls, the quantity demanded falls

B

The demand curve slopes upwards from left to right

C

An increase in demand is shown by a shift to the right

D

A decrease in demand is shown by a shift to the right

[ 1 ]

Question (b)

(b)

Define the term excess supply.

[ 1 ]

Question (c)

(c)

Figure 2 shows the market for electric cars.

Using the diagram below, draw the likely effects on the market for electric cars following the introduction of a subsidy on electric cars. Label the new curve, the new equilibrium price and the new equilibrium quantity.

Figure 2

Figure 2

[ 3 ]

1.1.3 Demand, supply and market equilibrium question 3

[Maximum number: 13]

Question (a)

(a)

State one factor that will cause a demand curve to shift to the left.

Beating the congestion in Dhaka

Nearly 17 million people live in Dhaka, the capital of Bangladesh. The majority of people live in the city centre and traffic congestion is a problem. However, there are many auto rickshaws (a small, three-wheeled vehicle, driven by a motorcycle engine) competing in the city centre to take passengers to their destinations. Fares tend to be cheaper in the city centre than they are outside the city centre and are usually agreed between passengers and drivers.

Dhaka has a large number of auto rickshaws competing for fares.

[ 1 ]

Question (b)

(b)

With reference to the information given in 'Beating the congestion in Dhaka', explain one reason why prices for journeys using an auto rickshaw might be higher outside the city centre.

[ 3 ]

Question (c)

(c)

A lack of space in many busy cities means parking is an increasing problem. Japan has developed the first Automated Parking Systems (APS). These are car parks where the cars are automatically stacked. The driver takes the car to the entrance, then technology takes over, placing each car on racks, one above the other. This allows many cars to be parked in a very small area. Not only do they offer a more practical use of space than traditional multi-storey car parks, but they cost less to build. The drivers benefit from cheaper parking fees and they save time.

Figure 4

Figure 4

With reference to the data above and your knowledge of economics, assess the extent to which changes in technology may reduce the shortage of car parking spaces in city centres.

[ 9 ]
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