AQA GCSE Economics: Equilibrium price, revenue and intermarket links (8136) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover sections 3.1.3.3 (Equilibrium price) and 3.1.3.4 (Intermarket relationships) of the AQA GCSE Economics (8136) specification, for first teaching from September 2017. The specification marks no tiers. All markets, firms and figures are invented and illustrative.

Links: course hub, printable checklist, study guide, revision notes and the free diagnostics.

Questions

1. Define equilibrium price. [2]

2. The table shows the weekly market for loaves in a village in Country A (illustrative).

Price (£)	Quantity demanded	Quantity supplied
1	300	60
2	240	120
3	180	180
4	120	240
5	60	300

(a) Give the equilibrium price and the equilibrium quantity. [2] (b) Calculate the excess demand or excess supply at £2, and say which it is. [2] (c) Calculate the revenue of all sellers at the equilibrium. [1]

3. In a market for craft scarves the equilibrium is £6 and 50 scarves a week. A new trend raises demand, and the equilibrium becomes £8 and 60 scarves. (a) Calculate the revenue before and after the change, and the change in revenue. [3] (b) Describe how revenue is shown on a demand and supply diagram. [2]

4. A market has an equilibrium price of £5, but sellers charge £7. Explain how the price will return to £5. [4]

5. The price of margarine rises from £2.00 to £2.40. (a) Calculate the percentage rise. [1] (b) Explain the effect on the market for butter. [4]

6. Tennis rackets and tennis balls are complements. Explain the effect on the market for tennis balls of a fall in the price of rackets. [4]

7. A heatwave hits Town A. Describe, using a diagram, the effect on the market for ice lollies. [4]

8. A market for garden benches has demand of 900 minus 30 times the price and supply of 60 plus 30 times the price (price in £, quantities in benches a month, illustrative). (a) Calculate the equilibrium price and quantity. [2] (b) Calculate the excess demand at £10. [2] (c) Higher timber costs cut supply by 60 benches at every price. Calculate the new equilibrium. [2] (d) Calculate revenue before and after the cost rise. [2]

9. A poor potato harvest raises the price of potatoes. Explain the effects on the markets for rice (a substitute) and for butter (a complement). [6]

10. A fall in the price of streaming subscriptions will harm cinemas. Evaluate this statement. [9]

11. A concert hall has 4,200 seats. Tickets sell out in minutes at the face value, and some are resold at higher prices. Explain this using supply and demand. [6]

Answers

1. Equilibrium price is the price at which quantity demanded equals quantity supplied [1]. At that price there is no excess demand or excess supply, so there is no pressure for the price to change [1]. [2] Examiner insight: Saying only that it is where the curves meet repeats the idea without defining it; stating that the two quantities are equal is the point to include.

2. (a) Quantities match at £3 [1], with 180 loaves [1]. [2] (b) At £2, demanded 240 minus supplied 120 = 120 [1]. This is excess demand [1]. [2] (c) 3 x 180 = £540 [1]. [1] Examiner insight: Giving the price without the quantity in part (a) leaves half the answer out, and giving a gap without naming its type in part (b) often loses the second point.

3. (a) Before: 6 x 50 = £300 [1]. After: 8 x 60 = £480 [1]. Change: +£180 [1]. [3] (b) Revenue is the area of the rectangle from the origin to the equilibrium point [1]. The rectangle is as tall as the price and as wide as the quantity, so area = price x quantity [1]. [2] Examiner insight: Write the multiplication out. A bare total cannot show whether the price or the quantity was misread, and the area under a curve is not revenue.

4. At £7, quantity supplied is greater than quantity demanded, so there is excess supply [1]. Stock is left unsold [1]. Sellers lower the price to clear their stock [1]. Each cut tempts more buyers and discourages some sellers, so the gap narrows and closes at £5 [1]. [4] Examiner insight: A chain of cause and effect gains more credit than a statement that the market corrects itself; make sure the surplus appears at the start of the chain.

5. (a) (0.40 / 2.00) x 100 = 20% [1]. [1] (b) Margarine and butter are substitutes [1]. The dearer margarine makes butter relatively cheaper, so some buyers switch [1]. Demand for butter shifts right [1]. The butter price and quantity both rise [1]. [4] Examiner insight: Name the relationship before giving the direction. A shift of demand is the correct term here; “quantity demanded” would describe a movement along the curve.

6. Rackets and balls are used together, so they are complements [1]. Cheaper rackets mean more rackets are bought [1]. More players need balls, so demand for tennis balls shifts right [1]. The price and quantity of balls both rise [1]. [4] Examiner insight: Linking the two goods through use (“people who buy rackets need balls”) shows why the demand curve moves and is stronger than naming the term alone.

7. Hot weather increases demand for ice lollies, so the demand curve shifts right [1]. At the old price there is excess demand [1]. The price rises, moving up the supply curve [1]. The market settles at a dearer price with more lollies sold [1]. [4] Examiner insight: A diagram description should name both axes, both curves and both equilibrium points; a sketch alone, with no words, leaves the reader to guess your meaning.

8. (a) Set 900 - 30P = 60 + 30P, so 840 = 60P [1]. P = £14, Q = 900 - 420 = 480 benches [1]. [2] (b) At £10, demand = 900 - 300 = 600 and supply = 60 + 300 = 360 [1]. Excess demand = 240 benches [1]. [2] (c) New supply = 30P. Set 900 - 30P = 30P, so P = £15 [1]. Q = 900 - 450 = 450 benches [1]. [2] (d) Before: 14 x 480 = £6,720 [1]. After: 15 x 450 = £6,750 [1]. [2] Examiner insight: Show the line where the two expressions are set equal. Writing the method line makes your reasoning visible.

9. Fewer potatoes are supplied, so the price rises and quantity demanded falls [1]. Rice is a substitute, so buyers switch to it and demand for rice shifts right [1]. The price and quantity of rice rise [1]. Butter is used with potatoes, so it is a complement [1]. Fewer potatoes are bought, so demand for butter shifts left [1]. The price and quantity of butter fall [1]. [6] Examiner insight: Separate the two markets. Marks are lost when one paragraph mixes up which good’s demand moved and in which direction.

10. Streaming and cinema are substitutes [1]. A cheaper subscription makes streaming relatively more attractive [1]. Some consumers switch, so demand for cinema tickets shifts left [1]. There is excess supply at the old price [1]. The price and quantity of tickets fall, and revenue falls [1]. However, the effect depends on how close the substitutes are: a cinema gives a big screen and a social outing, so many buyers will not switch [1]. Other factors, such as a popular film release, could shift demand the other way [1]. Cinemas can respond with offers or by cutting costs, which limits the harm [1]. Overall, harm is likely but modest, since the two goods are only partial substitutes [1]. [9] Examiner insight: Evaluation points are stronger when each is tied to cinemas and streaming and carries a reason. A list of “it depends” statements without explanation is weaker, and a final judgement should follow from the points made.

11. The number of seats is fixed at 4,200, so supply is a vertical line [1]. At the face value, demand is greater than 4,200, so there is excess demand [1]. The venue cannot supply more tickets [1]. Buyers who missed out are willing to pay more [1]. On resale, the price rises until demand equals 4,200 where the demand curve meets the vertical supply curve [1]. Quantity stays at 4,200, so the whole adjustment is in price [1]. [6] Examiner insight: State that supply is fixed and explain why; it is the context that makes the price move without a change in quantity.

Where marks are usually lost

• Naming the new price without the new quantity.
• Calling a movement along a curve a shift, or the reverse.
• Showing revenue as the area under a curve instead of a price x quantity rectangle.
• Describing a shift without saying what appears at the old price.
• Treating complements as substitutes, so that the direction of the shift is reversed.
• Writing about the market in general terms rather than the one in the question.
• Giving a percentage or a total without the working.
• Listing evaluation points with no reasons.

Next steps

• Read the revision notes and the study guide.
• Visit the course hub and print the checklist.
• Take all the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

AQA GCSE Economics (8136) specification, for first teaching from September 2017, published by AQA. Sections 3.1.3.3 and 3.1.3.4.