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2.3 Demand
Question Paper

Course CIE IGCSE Economics

Section 2. The Allocation of Resources
Topic 2.3 Demand
Difficulty Medium

Time allowed: 10

Score: /5

Percentage: /100

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Question 1
The diagram shows the demand curve for coffee in the US.

Why did the quantity demanded move from Q1 to Q2?

A. Coffee became cheaper.
B. Incomes rose in the US.
C. There was a successful advertising campaign by coffee retailers.
D. The price of substitutes for coffee rose.
[1 mark]

Question 2
Petrol (fuel) retailers in a country have noticed a sharp increase in sales in August when many people take their holidays.
Why might this take place?
A. Consumers’ demand curve for petrol shifts to the left in August.
B. Consumers’ demand curve for petrol shifts to the right in August.
C. Oil refineries increase their output in August.
D. Travel companies increase their hotel prices in August.
[1 mark]

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Question 3
The diagram shows the demand for and the supply of air travel.

What could cause a shift of the demand curve from D1 to D2?

A. an increase in airline costs
B. an increase in airport taxes
C. an increase in incomes
D. an increase in worldwide terrorism
[1 mark]

Question 4
When the price of a product increases and the quantity demanded decreases, what is the outcome?
A. A movement to the left along the demand curve
B. A movement to the right along the demand curve
C. A shift in the demand curve
D. No change in the demand curve
[1 mark]

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Question 5
When the price of a product decreases and leads to an increase in the quantity demanded, what type of movement along
the demand curve is this called?
A. Expansion of demand
B. Contraction of demand
C. Elastic demand
D. Inelastic demand
[1 mark]

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Question 1
A mobile (cell) phone operator increases the price of making calls on its network. After the price increase, the revenue of the
mobile phone operator falls by 10%.
What is the price elasticity of demand (PED) for the mobile operator’s service?
A. elastic
B. inelastic
C. perfectly elastic
D. unit elastic
[1 mark]

Question 2
A product has a price elasticity of demand of – 0.5.
What happens to the demand for a product if its price falls from $1 to $0.80?
A. It decreases by 10%.
B. It decreases by 20%.
C. It increases by 10%.
D. It increases by 20%.
[1 mark]

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Question 3
The table shows the demand and supply for spices in a market in Africa.

price quantity quantity

per kg (US$) demanded (kg) supplied (kg)
10 50 10
20 40 20
30 30 30
40 20 40

When the price rises from US$20 to US$30 per kg, what is the price elasticity of demand (PED) for spices?
A. 0.25
B. 0.5
C. 1.0
D. 2.0
[1 mark]

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Question 4
In Portugal, the response to changes in the price of French cheese are considered to be unit elastic.
Which diagram illustrates this situation?

A.

B.

C.

D.

[1 mark]

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Question 1
The table shows the effect of a change in the market price from $5 to $6 on the supply of mobile (cell) phones.
price supply
($) (units)
5 10000
6 15000

Which statement about the price elasticity of supply of mobile phones is correct?
A. Price elasticity of supply is 0.4.
B. Price elasticity of supply is 2.5.
C. Supply is perfectly elastic.
D. There is unit elasticity.
[1 mark]

Question 2
The price elasticity of supply of a good is 2. The price of the good then falls by 10%.
What is the effect on quantity supplied?
A. It falls by 0.2%.
B. It falls by 20%.
C. It increases by 0.2%.
D. It increases by 20%.
[1 mark]

Question 3
Which of the following statements about the price elasticity of supply (PES)? is accurate?
A. PES measures the responsiveness of quantity demanded to a change in price
B. PES is applicable only to luxury goods and not to essential commodities
C. A product with perfectly elastic supply has an infinite PES value
D. PES values are always negative due to the inverse relationship between price and quantity supplied
[1 mark]
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Question 4
What is the key characteristic of a product with a perfectly inelastic price elasticity of supply (PES)?
A. Producers can easily adjust production quantities
B. The PES value is equal to 1
C. Consumers are highly responsive to price changes
D. Quantity supplied remains constant regardless of price changes
[1 mark]

Question 5
If the price elasticity of supply (PES) of a product is 0.5, what can be inferred about the supply responsiveness?
A. Supply is highly responsive to price change
B. Supply is inelastic and less responsive to price changes
C. Supply is perfectly elastic
D. Supply is constant regardless of price changes
[1 mark]

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2.5 Price Determination

Question Paper

Course CIE IGCSE Economics

Section 2. The Allocation of Resources
Topic 2.5 Price Determination
Difficulty Medium

Time allowed: 10

Score: /5

Percentage: /100

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Question 1
A newspaper reported that ‘The world market for coffee has returned to equilibrium’.
Which situation supports this statement?
A. A sequence of poor harvests resulted in shortages.
B. Decreased transport costs led to a surplus of supply.
C. Farmers matched demand by planting more coffee bushes.
D. The price of coffee was fixed between producers.
[1 mark]

Question 2
When demand exceeds supply for a product, what does the price mechanism usually lead to?
A. An increase in government intervention to control prices
B. A decrease in demand as consumers find substitutes
C. An increase in the price of the product
D. A surplus of the product in the market
[1 mark]

Question 3
What does it mean when a market is in disequilibrium?
A. Supply and demand are balanced
B. Excess supply or demand exists
C. The market is not functional
D. Prices are fixed by the government
[1 mark]

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Question 4
In a market characterised by excess supply, what is likely to happen in the absence of intervention?
A. Producers will reduce prices to eliminate the excess supply
B. Producers will increase prices to match the excess supply
C. Consumers will increase demand to match the excess supply
D. Consumers will decrease demand to match the excess supply
[1 mark]

Question 5
How do market forces typically respond to a shortage?
A. Prices decrease to eliminate the shortage
B. Prices increase to eliminate the shortage
C. Prices remain unchanged despite the shortage
D. Producers reduce supply to address the shortage
[1 mark]

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Question 1
In 2018 the UK government introduced a tax on the production of sugary drinks.
How would this affect the market for sugary drinks as shown on a demand and supply diagram?
demand curve supply curve
for sugary drinks of sugary drinks
A contraction in demand shift to the left
B extension in demand shift to the right
C shift to the left contraction in supply
D shift to the right extension in supply

[1 mark]

Question 2
The table shows the quantity demanded and supplied for a commodity at different prices.

price quantity quantity

($) demanded supplied
10 100 800
9 210 700
8 400 600
7 500 500
6 600 400

What would happen to the equilibrium price if the quantity supplied increased by 200 units at each price?
A. It would decrease by $1.
B. It would decrease by $2.
C. It would increase by $1.
D. It would increase by $2.
[1 mark]

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Question 3
If a substitute good becomes more expensive, what effect does this have on the equilibrium price and quantity of the original
good?
A. Equilibrium price decreases, quantity decreases
B. Equilibrium price increases, quantity increases
C. Equilibrium price increases and the quantity decreases
D. Equilibrium price decreases and quantity increases
[1 mark]

Question 4
What effect does an increase in the number of suppliers have on the equilibrium price and quantity of a product?
A. Equilibrium price decreases, quantity increases
B. Equilibrium price increases, quantity decreases
C. Equilibrium price and quantity both decrease
D. Equilibrium price and quantity both increase
[1 mark]

Question 5
In 2019 the Malaysian government increased a per litre subsidy on the production of petrol.
How would this affect the market for petrol as shown on a demand and supply diagram?
demand curve supply curve
for petrol of petrol
A extension in demand shift to the right
B contraction in demand shift to the left
C shift to the left contraction in supply
D shift to the right extension in supply

[1 mark]

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2.4 Supply
Question Paper

Course CIE IGCSE Economics

Section 2. The Allocation of Resources
Topic 2.4 Supply
Difficulty Medium

Time allowed: 10

Score: /5

Percentage: /100

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Question 1
What is not held constant when constructing the supply curve of a firm?
A. indirect taxes and subsidies on the firm’s products
B. the level of technology used by the firm in production
C. the price of the factors of production paid for by the firm
D. the market price of the good produced by the firm
[1 mark]

Question 2
If the government imposes a tax on a product, what is the likely impact on its supply curve?
A. The supply curve shifts to the left
B. The supply curve shifts to the right
C. The supply curve remains unchanged
D. The supply curve becomes inelastic
[1 mark]

Question 3
How does an increase in the number of suppliers in a market impact the supply curve?
A. The supply curve becomes less elastic
B. The supply curve shifts to the left
C. The supply curve becomes more elastic
D. The supply curve shifts to the right
[1 mark]

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Question 4
What is the effect on the supply curve of a product if there is an increase in the price of a key raw material used in its
production?
A. The supply curve shifts to the left
B. The supply curve remains unchanged
C. The supply curve shifts to the right
D. The supply curve becomes inelastic
[1 mark]

Question 5
What effect would an increase in government subsidies for solar panel manufacturers have on the supply of solar panels?
A. Supply would increase
B. Supply would decrease
C. Supply would remain unchanged
D. Supply would become elastic
[1 mark]

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