These are original Marlbridge practice questions, not past exam questions. All questions use Valdoria, a fictional country whose currency is the valda (VD); all prices and quantities are fictional. The rubrics are a suggested Marlbridge rubric to help you check your work; they are not an official scoring guideline. Assumptions: markets are competitive; “other things equal” applies unless a question changes something; a four-function calculator is enough.
Question 1 (multiple choice · foundation)
Other things equal, the price of Valdorian olive oil rises. According to the law of supply, which of the following happens?
- (A) The supply curve of olive oil shifts to the right.
- (B) The quantity of olive oil supplied rises, shown as a movement up along the supply curve.
- (C) The quantity of olive oil demanded rises, because producers want to sell more.
- (D) The quantity of olive oil supplied falls, because producing oil becomes more expensive.
Answer and explanation
Answer: (B). The law of supply links a higher price with a larger quantity supplied. Only the good’s own price changed, so producers move along the existing curve.
- (A) confuses a change in quantity supplied with a change in supply. A change in the good’s own price never shifts its own supply curve.
- (C) mixes up the two sides of the market. Quantity demanded is chosen by buyers, and the law of demand says it falls when the price rises.
- (D) reverses the law of supply. A higher selling price makes extra output more worthwhile, so quantity supplied rises.
Question 2 (multiple choice · core)
The market supply of eggs in Valdoria is Qs = 30P − 20, where Qs is dozens of eggs per day and P is the price in valdas per dozen. The price rises from VD 3 to VD 5, and nothing else changes. Which statement is correct?
- (A) Supply increases by 60 dozen per day, so the supply curve shifts to the right.
- (B) Quantity supplied rises from 70 to 130 dozen per day, which shifts the supply curve to the right.
- (C) Quantity supplied rises from 70 to 130 dozen per day, shown as a movement along the supply curve.
- (D) Quantity supplied falls by 60 dozen per day, because buyers want fewer eggs at a higher price.
Answer and explanation
Answer: (C). At VD 3: 30(3) − 20 = 70 dozen. At VD 5: 30(5) − 20 = 130 dozen. Quantity supplied rises by 60 dozen per day. The cause is the good’s own price, so this is a movement along the curve.
- (A) gets the size of the change right but calls it a change in supply. No determinant changed, so the curve does not shift.
- (B) has the right numbers but the wrong graph: a movement along the curve, not a shift.
- (D) describes buyers’ behaviour (the law of demand), not sellers’. Sellers offer more at a higher price.
Question 3 (multiple choice · core)
Which of the following would shift the supply curve of Valdorian coffee to the right?
- (A) The government pays coffee growers a subsidy of VD 0.20 for each kilogram they sell.
- (B) The wages of coffee pickers rise.
- (C) The market price of coffee rises.
- (D) Valdorian households’ incomes rise and they buy more coffee.
Answer and explanation
Answer: (A). A per-unit subsidy lowers the cost to growers of each kilogram sold, so they are willing to supply more at every price. Supply increases: the curve shifts right.
- (B) raises an input price. Higher costs decrease supply, a shift to the left.
- (C) is a change in the good’s own price, which causes a movement along the supply curve, not a shift.
- (D) is a change in a determinant of demand (income). It does not shift the supply curve.
Question 4 (multiple choice · core)
Farmers in northern Valdoria can use the same fields to grow either wheat or barley. The price of barley rises sharply. What is the most likely effect on the market for wheat?
- (A) The supply of wheat increases, because farmers are earning more and can afford to grow more.
- (B) The quantity of wheat supplied increases, shown as a movement along the wheat supply curve.
- (C) The supply of wheat decreases, because farmers move fields from wheat to barley.
- (D) Nothing happens to wheat supply, because the price of barley is not a determinant of wheat supply.
Answer and explanation
Answer: (C). Barley is an alternative product that uses the same resources. When barley becomes more rewarding, farmers switch land to it. At every wheat price, less wheat is offered: the wheat supply curve shifts left.
- (A) reverses the direction. Growing wheat now means giving up more valuable barley, so wheat becomes less attractive to grow.
- (B) treats a change in another good’s price as a change in wheat’s own price. Only wheat’s own price causes a movement along the wheat supply curve.
- (D) ignores a determinant: the price of other goods a producer could make with the same resources does shift supply.
Question 5 (calculation · core)
Three bakeries supply bread to a Valdorian town. The table shows how many loaves each is willing and able to sell per day.
| Price (VD per loaf) | Bakery X | Bakery Y | Bakery Z |
|---|---|---|---|
| 1.00 | 40 | 20 | 0 |
| 1.50 | 60 | 35 | 25 |
| 2.00 | 80 | 50 | 50 |
| 2.50 | 100 | 65 | 75 |
(a) Calculate the market quantity supplied at each price. (b) The price of bread rises from VD 1.50 to VD 2.50. Calculate the change in market quantity supplied and state whether this is a movement along the curve or a shift. (c) A fourth bakery, W, opens. It would supply 30, 45, 60 and 75 loaves at the four prices. Calculate the new market quantity supplied at each price and describe the effect on the market supply curve.
Worked solution
(a) Add across each row. VD 1.00: 40 + 20 + 0 = 60. VD 1.50: 60 + 35 + 25 = 120. VD 2.00: 80 + 50 + 50 = 180. VD 2.50: 100 + 65 + 75 = 240 loaves per day.
(b) 240 − 120 = +120 loaves per day. Only the price of bread changed, so this is an increase in quantity supplied: a movement along the market supply curve.
(c) New market quantity: VD 1.00: 60 + 30 = 90. VD 1.50: 120 + 45 = 165. VD 2.00: 180 + 60 = 240. VD 2.50: 240 + 75 = 315 loaves per day. More is supplied at every price, so market supply increases: the curve shifts to the right. The cause is a rise in the number of sellers.
Suggested mark points (4): 1 for all four market quantities in (a); 1 for +120 with “movement along the curve”; 1 for the four new quantities in (c); 1 for “supply increases / shifts right” linked to more sellers. Accept values carried forward from an error in (a).
Question 6 (constructed response · core)
Valdoria has many firms that make solar panels.
(a) Draw a correctly labelled graph of the market supply of solar panels. Label the curve S₁. (b) The firms install a new automated production line that cuts the cost of making each panel. On your graph, show the effect on supply. Label the new curve S₂. (c) Explain the effect you showed in (b). (d) Separately, panel makers expect the price of panels to rise sharply next year. They can store finished panels cheaply. What happens to the current supply of panels? Explain. (e) A rise in demand for panels pushes up their price. A student shifts the supply curve to the right to show that firms now make more panels. Explain the student’s error.
Model answer and suggested Marlbridge rubric
(a) Vertical axis labelled “Price” (VD per panel); horizontal axis labelled “Quantity of solar panels”; an upward-sloping curve labelled S₁.
(b) A second upward-sloping curve, S₂, drawn to the right of S₁, with an arrow from S₁ to S₂.
(c) The new production line is better technology. It lowers the cost of producing each panel, so at every price firms are willing and able to supply more panels. Supply increases.
(d) Current supply decreases (shifts left). Firms hold back some of today’s output to sell next year at the expected higher price, so they offer fewer panels at each price now.
(e) A change in demand changes the price, and firms respond by moving along their existing supply curve: quantity supplied rises. Nothing on the producers’ side (costs, technology, number of sellers) has changed, so the supply curve should not shift.
| Point | What earns it |
|---|---|
| 1 | Correctly labelled axes with an upward-sloping supply curve S₁ |
| 1 | S₂ drawn to the right of S₁ |
| 1 | Explains that lower cost per unit means more is supplied at every price |
| 1 | Current supply decreases, explained by holding back output for the expected higher price |
| 1 | Identifies the change as a movement along the supply curve (change in quantity supplied), not a shift |
In (b), a curve drawn only “upward” (to the left) does not earn the point. In (e), “demand is not supply” with no reference to a movement along the curve does not earn the point.
Question 7 (constructed response · stretch)
The market supply of boxes of dates in Valdoria is Qs = 40P − 60, where Qs is boxes per week and P is the price in valdas per box.
(a) Calculate the quantity supplied at prices of VD 3, VD 4, VD 5 and VD 6. (b) The government places a tax of VD 0.50 per box on sellers. Sellers now need a price VD 0.50 higher to supply any given quantity, so the new supply is Qs = 40(P − 0.50) − 60. Calculate the new quantity supplied at the same four prices, and the change at each price. (c) Describe the effect of the tax on the supply curve, in words and in the direction of the shift. (d) Instead of the tax, the government pays sellers a subsidy of VD 1.00 per box, so Qs = 40(P + 1.00) − 60. Calculate the quantity supplied at VD 4 and state the direction of the shift. (e) Use the idea of rising costs of extra output to explain why the original supply curve slopes upward.
Model answer and suggested Marlbridge rubric
(a) VD 3: 40(3) − 60 = 60. VD 4: 100. VD 5: 140. VD 6: 180 boxes per week.
(b) New Qs = 40P − 80. VD 3: 40. VD 4: 80. VD 5: 120. VD 6: 160 boxes per week. At every price, quantity supplied is 20 boxes lower.
(c) Supply decreases: the curve shifts left by 20 boxes at every price. Equivalently, it shifts up by VD 0.50: sellers now need VD 5.50, not VD 5.00, to supply 140 boxes.
(d) Qs = 40(4 + 1) − 60 = 140 boxes per week at VD 4, up from 100. Supply increases: the curve shifts right.
(e) To produce more boxes, sellers must use resources that are less suited to growing and packing dates, or pay more for overtime and extra inputs. Each extra box therefore costs more than the one before (increasing opportunity cost). Sellers will only supply these extra boxes if the price is high enough to cover their higher cost, so a larger quantity is supplied only at a higher price.
| Point | What earns it |
|---|---|
| 1 | All four quantities in (a) |
| 1 | All four new quantities in (b) with a fall of 20 at each price |
| 1 | Tax decreases supply: shift left (or up by VD 0.50) |
| 1 | 140 boxes at VD 4 and supply increases (shift right) |
| 1 | Links rising cost of extra output to needing a higher price, so the curve slopes upward |
In (c), “the curve shifts up” earns the point only if it is described as a decrease in supply. In (e), restating the law of supply without the cost reasoning does not earn the point.
How did you do?
- Q1, Q2 or Q5(b) wrong: re-read “The law of supply” and Worked example 1 in the study guide.
- Q3, Q4 or Q6(c)–(d) wrong: revisit “Determinants of supply” and Worked example 3.
- Q5(a) or (c) wrong: remember that market supply adds quantities at each price.
- Q6(a)–(b) or Q7(c) wrong: revisit Figure 2 and Worked example 2; check your axis labels and the direction of the shift.
- Q6(e) wrong: re-read “Change in quantity supplied v. change in supply”.
- Q7(e) wrong: re-read the three reasons under “The law of supply”.
Then tick off the topic checklist.