The Price Mechanism and Market Equilibrium Exam Questions

Question 1

The diagram below shows two market demand curves (D 1 and D 2 ) and the market supply curve (S), for Good X. The price elasticity of supply of Good X when the demand curve shifts from D 1 to D 2 is

A+0.25B+2.0C+4.0D+7.5

Question 2

Table 3 shows the demand for and supply of oranges at a range of prices between 10 pence and 30 pence. Table 3 Price (pence) Quantity supplied (000s) Quantity demanded (000s) 10 100 125 15 120 120 20 122 108 25 125 100 30 128 88 As a result of an increase in consumers’ incomes, the demand for oranges increases by 25% at each of the prices shown in Table 3. After the rise in incomes:

Aat a price of 10 pence, excess demand increases by 50%.Bat a price of 30 pence, excess supply falls by 75%.Cthe equilibrium market price increases by two-thirds.Dthe price elasticity of demand increases by 25% at each price.

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What this practice covers

Real past-paper questions, the answer key from the mark scheme, and the explanation that goes with it. Each one is marked the moment you pick, the correct option is shown whether or not you found it, and the full explanation opens either way. No account needed to answer them.

These questions are drawn from past AQA A-Level papers. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.

Practice is free. You need an account only so your progress and your mistakes are still there next time.

Keep going Paper 3 MCQs →

What examiners see students get wrong here

These are the errors that cost marks on the price mechanism and market equilibrium, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.

• Naming the three functions without explaining how each operates in the given market.
• Saying prices "cause" demand to change, a price change causes a movement along the demand curve, not a shift.
• Confusing excess demand with an increase in demand.
• Claiming the price mechanism always allocates efficiently, ignoring market failure.
• Forgetting that rationing by price is about ability as well as willingness to pay, an equity point.
• Describing the adjustment as instantaneous, ignoring elasticity of supply and time lags.

Revise it first

If any of the above is unfamiliar, work through the notes before practising: The Price Mechanism and Market Equilibrium revision notes.