How Markets Work: three questions to try now
Real past-paper questions, the answer key from the mark scheme, and the explanation that goes with it. No account needed to answer them.
Question 1
Estimates for the demand for black tea in the UK suggest that it is an inferior good. This implies it has a negative:
Answer: B.
The other options are incorrect because they measure different types of responsiveness. A) Cross elasticity of demand (XED) measures how the demand for one good changes when the price of a different good changes. C) Price elasticity of demand (PED) measures how quantity demanded responds to a change in the product’s own price. Finally, D) Price elasticity of supply (PES) measures how the quantity supplied by firms responds to a change in the market price. None of these relate to the relationship between consumer income and the quantity demanded of a specific good.
Question 2
Assume ‘Bettys’ merges with a major tea leaf supplier. Which one of the following is most likely to be an advantage as a result of this merger?
Answer: B.
Question 3
Which one of the following is an example of government failure associated with the maximum price?
Answer: B.
Options A, C, and D are incorrect because they describe market outcomes rather than government failure. A contraction in demand (A), excess supply (C), and an extension in supply (D) are simply the mechanical changes in quantity that result from price interventions; they are market responses to the price change, not the failure of the government's intervention itself.
What this practice covers
These questions are drawn from past Edexcel 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 multiple-choice questions →
What examiners see students get wrong here
These are the errors that cost marks on how markets work, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Confusing a movement along with a shift.
- Dropping the sign in YED and XED, where the sign carries the meaning.
- Saying an elasticity is "high" without comparing it to 1.
- Treating "inferior good" as low quality; it means demand falls as income rises.
- Reversing the surplus areas, consumer surplus is below demand, above price.
- Treating government tax revenue as part of the deadweight loss; it is a transfer.
- Ignoring elasticity when discussing tax incidence.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: How Markets Work revision notes.