Practise market-force questions by analysing how excess demand or supply creates price pressure until equilibrium returns.
With reference to the data above and your knowledge of economics, analyse how market forces can remove excess supply.
Public universities in Norway do not charge students any tuition fees. Education is funded by the government. In recent years Norway has spent more on education than any other country as a percentage of GDP. Norway also has one of the lowest rates of unemployment in the world.
AO2 (3 marks)/AO3 (3 marks)
AO2 and AO3
- Excess supply is where supply is greater than demand and there are unsold products in the market
- Market forces refer to supply and demand, as well as how they determine the allocation of scarce resources and price
- Where there is excess supply at 10000 Kip , price will fall as a result of supply being greater than demand
- Therefore, at 10000 Kip , eight LOCA drivers wanted to offer journeys but only four passengers wanted to buy
- If drivers lowered their price to 8000 Kip the excess supply would be removed
- Demand rises as the price falls, until the equilibrium price of 8000 Kip and the equilibrium quantity of six journeys is reached
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-2
- Demonstrates basic knowledge and understanding by developing relevant points. Limited application of economic terms, concepts, theories and calculations (AO2).
- Information presented will lack selectivity and organisation. Interpretation of economic information will be limited, with a lack of analysis of issues (AO3).
Level 2
3-4
- Demonstrates partial knowledge and understanding by developing relevant points. Partial application of economic terms, concepts, theories and calculations (AO2).
- Information presented will demonstrate some selectivity and organisation. Interpretation of economic information will be good, with some analysis of issues (AO3).
Level 3
5-6
- Demonstrates clear knowledge and understanding by developing relevant points. Appropriate application of economic terms, concepts, theories and calculations (AO2).
- Information presented will demonstrate excellent selectivity and organisation. Interpretation of economic information will be excellent, with a thorough analysis of issues (AO3).