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: every market is competitive; when one factor changes, all other factors stay the same; demand and supply curves are straight lines unless a table says otherwise.
Question 1 (multiple choice · foundation)
The table shows the weekly market for umbrellas in Valdoria.
| Price (VD) | Quantity demanded | Quantity supplied |
|---|---|---|
| 5 | 900 | 100 |
| 10 | 700 | 300 |
| 15 | 500 | 500 |
| 20 | 300 | 700 |
| 25 | 100 | 900 |
If the price is VD 20, which statement describes the market?
- (A) There is a shortage of 400 umbrellas.
- (B) There is a surplus of 400 umbrellas.
- (C) There is a surplus of 200 umbrellas.
- (D) The market is in equilibrium, because 700 umbrellas are supplied.
Answer and explanation
Answer: (B). At VD 20, Qs = 700 and Qd = 300. Qs > Qd, so there is a surplus of 700 − 300 = 400 umbrellas.
- (A) has the right size but the wrong type. A price above equilibrium (VD 15) creates a surplus, not a shortage.
- (C) compares Qs at VD 20 with the equilibrium quantity (700 − 500). The surplus compares Qs and Qd at the same price.
- (D) ignores demand. Equilibrium needs Qd = Qs, which happens only at VD 15.
Question 2 (multiple choice · core)
In a competitive market, the current price is below the equilibrium price. Which sequence of events will follow?
- (A) A shortage; the price rises; quantity demanded falls and quantity supplied rises until they are equal.
- (B) A surplus; the price falls; quantity demanded rises and quantity supplied falls until they are equal.
- (C) A shortage; the supply curve shifts to the right until the shortage disappears.
- (D) A shortage; the demand curve shifts to the left until the shortage disappears.
Answer and explanation
Answer: (A). Below equilibrium, Qd > Qs, which is a shortage. Buyers compete for the limited goods, so the price is bid up. The higher price reduces quantity demanded and increases quantity supplied, both movements along the curves, until Qd = Qs.
- (B) describes a price above equilibrium.
- (C) and (D) treat the price adjustment as a shift. The price is not a determinant of demand or supply; a change in the good’s own price causes movements along the curves, not shifts.
Question 3 (multiple choice · core)
Workers who assemble bicycles in Valdoria win a large wage increase. Nothing else changes. What happens in the market for bicycles?
- (A) Equilibrium price rises and equilibrium quantity rises.
- (B) Equilibrium price rises and equilibrium quantity falls.
- (C) Equilibrium price falls and equilibrium quantity rises.
- (D) Equilibrium price falls and equilibrium quantity falls.
Answer and explanation
Answer: (B). Wages are an input price for bicycle producers. A higher input price raises costs, so supply decreases (S shifts left). At the old price there is a shortage, so the price rises and the equilibrium quantity falls.
- (A) is the result of an increase in demand. The wage rise affects sellers’ costs, not buyers’ wants.
- (C) is the result of an increase in supply, the opposite direction.
- (D) is the result of a decrease in demand.
Question 4 (multiple choice · core)
A report shows that eating dates improves health, and at the same time a new irrigation method raises date harvests. Assume the report increases the demand for dates and the irrigation method increases the supply. What happens to the equilibrium in the market for dates?
- (A) Price rises; the change in quantity is indeterminate.
- (B) Price falls; quantity rises.
- (C) The change in price is indeterminate; quantity rises.
- (D) Price and quantity both rise.
Answer and explanation
Answer: (C). Higher demand pushes the price up and the quantity up. Higher supply pushes the price down and the quantity up. Both shifts raise the quantity, so quantity definitely rises. The effects on price conflict, so the change in price depends on the relative sizes of the shifts and is indeterminate.
- (A) gets both parts wrong: the effects on price conflict, while the effects on quantity agree.
- (B) considers only the supply shift.
- (D) considers only the demand shift.
Question 5 (calculation · core)
The table shows the weekly market for rice in Valdoria. Quantities are in thousand kilograms (kg).
| Price per kg (VD) | Quantity demanded | Quantity supplied |
|---|---|---|
| 1.50 | 60 | 35 |
| 2.00 | 50 | 50 |
| 2.50 | 40 | 65 |
| 3.00 | 30 | 80 |
| 3.50 | 20 | 95 |
(a) State the equilibrium price and quantity. (b) Calculate the surplus or shortage at VD 1.50 and at VD 3.00. (c) A flood damages farms, and the quantity supplied falls by 25 thousand kg at every price. Find the new equilibrium price and quantity. (d) Calculate the shortage or surplus at the original equilibrium price immediately after the flood, and explain how the market reaches the new equilibrium.
Worked solution and suggested Marlbridge rubric
(a) Qd = Qs = 50 at VD 2.00. P = VD 2.00 per kg, Q = 50 thousand kg per week.
(b) At VD 1.50: Qd = 60, Qs = 35, so there is a shortage of 25 thousand kg (60 − 35). At VD 3.00: Qs = 80, Qd = 30, so there is a surplus of 50 thousand kg (80 − 30).
(c) New supply = old supply − 25: 10, 25, 40, 55 and 70 thousand kg at VD 1.50, 2.00, 2.50, 3.00 and 3.50. New Qs = Qd = 40 at VD 2.50. New P = VD 2.50 per kg, new Q = 40 thousand kg. The price rises by VD 0.50 and the quantity falls by 10 thousand kg.
(d) At VD 2.00, Qd = 50 but the new Qs = 25, so there is a shortage of 25 thousand kg. Buyers bid the price up. As the price rises, quantity demanded falls along the demand curve and quantity supplied rises along the new supply curve, until they are equal at VD 2.50.
| Point | What earns it |
|---|---|
| 1 | Equilibrium VD 2.00 and 50 thousand kg |
| 1 | Shortage of 25 at VD 1.50 and surplus of 50 at VD 3.00 |
| 1 | New equilibrium VD 2.50 and 40 thousand kg |
| 1 | Shortage of 25 thousand kg at VD 2.00 after the flood |
| 1 | Price rises; Qd falls and Qs rises (along the curves) until equal |
In (b), naming “shortage” and “surplus” without the sizes earns no point. In (d), saying “demand falls” instead of “quantity demanded falls” does not earn the last point.
Question 6 (constructed response · core)
Solar lamps are sold in a competitive market in Valdoria.
(a) Draw a correctly labelled graph of the market for solar lamps. Show the equilibrium price P₁ and quantity Q₁. (b) The price of solar panels, an input used to make the lamps, falls. On your graph, show the effect, and label the new equilibrium price P₂ and quantity Q₂. (c) Immediately after the change in (b), is there a shortage or a surplus at P₁? Explain how the price adjusts. (d) Now suppose that, at the same time as the change in (b), Valdorian incomes rise, and solar lamps are a normal good. Compared with the original equilibrium, what happens to the equilibrium quantity and to the equilibrium price? Explain.
Model answer and suggested Marlbridge rubric
(a) Vertical axis labelled “Price” (of solar lamps), horizontal axis labelled “Quantity”. A downward-sloping curve labelled D and an upward-sloping curve labelled S. Where they cross, dashed lines to the axes marked P₁ and Q₁.
(b) A cheaper input lowers production costs, so supply increases: draw S₂ to the right of S₁. The new intersection with D gives P₂ below P₁ and Q₂ to the right of Q₁. The demand curve does not move.
(c) A surplus. At P₁, the new supply curve S₂ shows a larger quantity supplied than the quantity demanded. Sellers cut the price to sell the unsold lamps. As the price falls, quantity demanded rises along D and quantity supplied falls along S₂ until they are equal at P₂.
(d) Higher incomes increase the demand for a normal good, so D shifts right. Both shifts (S right and D right) raise the quantity, so equilibrium quantity rises. The supply increase pushes the price down but the demand increase pushes it up, so the change in price is indeterminate without knowing which shift is larger.
| Point | What earns it |
|---|---|
| 1 | Correctly labelled axes, D and S, with P₁ and Q₁ shown on the axes |
| 1 | Supply shifted right with P₂ lower and Q₂ higher, labelled on the axes |
| 1 | Surplus at P₁, with the explanation that sellers cut the price until Qd = Qs |
| 1 | Equilibrium quantity rises, because both shifts increase quantity |
| 1 | Price indeterminate, because the two shifts push the price in opposite directions |
In (b), a graph that shifts demand instead of supply earns no point; (c) can still earn its point if the answer is consistent with the graph drawn, and (d) is scored on its own. In (d), “price falls” with no reference to the sizes of the shifts earns no point.
Question 7 (constructed response · stretch)
The table shows the weekly market for coffee beans in Valdoria, in tonnes. The original market is shown first. Two economists then predict different futures, X and Y. In both, a health report decreases demand and a drought decreases supply, but by different amounts.
| Price per kg (VD) | Original Qd | Original Qs | X: Qd | X: Qs | Y: Qd | Y: Qs |
|---|---|---|---|---|---|---|
| 5.0 | 50 | 30 | 30 | 20 | 40 | 10 |
| 5.5 | 45 | 35 | 25 | 25 | 35 | 15 |
| 6.0 | 40 | 40 | 20 | 30 | 30 | 20 |
| 6.5 | 35 | 45 | 15 | 35 | 25 | 25 |
| 7.0 | 30 | 50 | 10 | 40 | 20 | 30 |
(a) State the original equilibrium price and quantity. (b) Find the new equilibrium price and quantity in X and in Y. (c) In X, is there a surplus or shortage at the original equilibrium price? Calculate it. (d) Using your answers, explain what can and cannot be predicted when demand and supply both decrease.
Model answer and suggested Marlbridge rubric
(a) Qd = Qs = 40 at VD 6.0. P = VD 6.0 per kg, Q = 40 tonnes.
(b) X: Qd = Qs = 25 at VD 5.5. P = VD 5.5, Q = 25 tonnes. Y: Qd = Qs = 25 at VD 6.5. P = VD 6.5, Q = 25 tonnes.
(c) In X at VD 6.0, Qd = 20 and Qs = 30, so there is a surplus of 10 tonnes (30 − 20). The price falls to VD 5.5.
(d) A decrease in demand and a decrease in supply both reduce the equilibrium quantity, so the quantity falls in both X and Y (40 to 25 tonnes). This can be predicted. Their effects on price conflict: the demand decrease pushes the price down, the supply decrease pushes it up. In X the demand decrease is larger (20 tonnes at every price against 10), and the price falls to VD 5.5. In Y the supply decrease is larger (20 against 10), and the price rises to VD 6.5. So the direction of the price change cannot be predicted unless the sizes of the shifts are known: it is indeterminate.
| Point | What earns it |
|---|---|
| 1 | Original equilibrium VD 6.0 and 40 tonnes |
| 1 | Both new equilibria correct: X at VD 5.5 and Y at VD 6.5, each with 25 tonnes |
| 1 | Surplus of 10 tonnes in X at VD 6.0 |
| 1 | Quantity definitely falls, because both shifts reduce quantity |
| 1 | Price indeterminate, supported by X and Y moving in opposite directions because the shifts differ in size |
Accept “the larger shift decides the direction of the price change” as part of the last point. Values carried forward from an error in (b) can still earn the points in (c) and (d).
How did you do?
- Q1 or Q5(a)–(b) wrong: re-read “Disequilibrium: surpluses and shortages” and Worked example 1 in the study guide.
- Q2, Q5(d) or Q6(c) wrong: revisit “How prices restore equilibrium”: prices move quantities along the curves.
- Q3, Q5(c) or Q6(b) wrong: revisit “Changes in equilibrium: when a curve shifts” and Worked example 2.
- Q4, Q6(d) or Q7 wrong: revisit Worked example 3 and the two-shift table.
- Q6(a)–(b) graph marks lost: use the five steps in “Showing a change on a graph”.
Then tick off the topic checklist.