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Demand · Paper 1 — Free Economics HL Practice Questions
1FoundationSAQ-SLaw of demand and its determinants8 marksPaper 1~12 min
In the market for electric vehicles (EVs), the government introduces a subsidy for EV manufacturers, reducing their production costs. Simultaneously, consumers' incomes rise.
(a)
Define the term income as a determinant of demand. [1 mark]
(b)
Using a demand supply , explain how the rise in consumers' incomes and the government subsidy each affect the EV market. [3 marks]
(c)
Evaluate whether the combined effect of the subsidy and the rise in consumers' incomes will necessarily lead to a higher equilibrium price for EVs. [4 marks]
Solutions
2FoundationSAQ-SLaw of demand and its determinants5 marksPaper 1~8 min
A local coffee shop notices that when the price of tea increases by , the quantity of coffee demanded increases by . The price of coffee itself remains unchanged.
(a)
Define the term substitute goods. [1 mark]
(b)
Calculate the cross-price elasticity of demand (XED) between coffee and tea, and state what the sign of your answer indicates about the relationship between the two goods. [2 marks]
(c)
Using a demand for coffee, explain the effect of the rise in the price of tea on the market for coffee.
Total: 5 marks [2 marks]
Solutions
3MasterySAQ-SLaw of demand and its determinants10 marksPaper 1~15 min
A scientific report, widely covered in national media, concludes that regular consumption of mackerel significantly reduces cardiovascular disease risk. At the same time, an unusually severe summer heatwave leads consumers in a coastal town in Japan to shift their meal preferences toward lighter foods.
(a)
Draw a fully labelled demand for mackerel, showing an initial demand curve and a new demand curve after both factors take effect. [2 marks]
(b)
Explain how each of the two factors acts a non-price determinant of demand for mackerel, causing the shift shown in your . [4 marks]
(c)
Evaluate whether the combined rightward shift in demand will necessarily lead to a large increase in the equilibrium price of mackerel in this coastal town. [4 marks]
Solutions
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