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Competitive Market Equilibrium · Paper 1 — Free Economics SL Practice Questions
1FoundationSAQ-SThe concept of equilibrium price and quantity8 marksPaper 1~12 min
A market for fresh strawberries in equilibrium at a price of USD 3 per punnet and a quantity of 500 punnets per day. A new study is published showing that strawberries contain a nutrient that significantly reduces the risk of heart disease.
(a)
Define the term equilibrium price. [1 mark]
(b)
Using a demand supply , explain how the publication of the study is likely to affect the equilibrium price and quantity of strawberries. [3 marks]
(c)
Evaluate how the price elasticity of supply of fresh strawberries might influence the extent of the price change following the publication of the study. [4 marks]
Solutions
2MasterySAQ-SThe concept of equilibrium price and quantity4 marksPaper 1~6 min
In the market for fresh coffee beans in Colombia, the demand supply schedules are given by the following linear equations, where is measured in thousands of tonnes per month and is the price in thousands of Colombian pesos per tonne:
(a)
Calculate the equilibrium price and quantity in this market. [2 marks]
(b)
A major drought reduces the coffee harvest and, simultaneously, consumer preferences shift strongly towards coffee consumption. Evaluate the effect on equilibrium price and quantity, given that the rightward shift in demand is proportionally larger than the leftward shift in supply. [2 marks]
Solutions
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