Cambridge O Level Economics: Micro vs macro, the market system and the demand curve (2281) – 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 are aligned to the Cambridge O Level Economics 2281 syllabus for examination in 2026, sections 2.1 to 2.3: microeconomics and macroeconomics, the role of markets in allocating resources, and demand. The course is not tiered. Calculators may be used in the examination. Every market, firm and figure below is invented for practice.

Need a refresher first? Read the study guide or the revision notes. The Cambridge O Level Economics hub and the printable checklist show where this unit sits in the course. For a quick check of your level, see the free diagnostics.

Questions

1. Define demand. [2]

2. State whether each of the following is a microeconomic or a macroeconomic matter.

(a) A street vendor decides how many mangoes to stock. [1] (b) The rate of unemployment in Country C falls over a year. [1] (c) A household cuts its spending on fuel after the price rises. [1]

3. Explain how the price mechanism helps to answer the question “what to produce?”. [4]

4. The table shows the weekly demand of three customers for pencils at a stationery stall. All figures are illustrative.

Price (cu)	Customer 1	Customer 2	Customer 3
10	30	20	10
20	24	15	8
30	18	10	6
40	12	5	4
50	6	0	2

(a) Calculate market demand at each price. [2] (b) State the relationship between price and quantity demanded shown by the table. [1] (c) Calculate Customer 2’s share of market demand at a price of 30 cu, as a percentage to 1 decimal place. [2]

5. Use the market demand you found in question 4. The price of a pencil falls from 40 cu to 30 cu.

(a) State the change in quantity demanded, using the correct term. [2] (b) Calculate the percentage change in quantity demanded, to 1 decimal place. [2]

6. The table shows the monthly demand for woollen scarves in Town C. The figures are illustrative.

Price (cu)	4	6	8	10
Quantity demanded	50	40	30	20

A mild winter reduces demand by 20% at every price.

(a) Calculate the new quantity demanded at each price. [2] (b) Explain why this is a decrease in demand and not a contraction. [2] (c) Explain how a rise in the price of scarves would be shown on the original demand curve. [2]

7. The table shows the market for fish in Village D. The figures are illustrative.

Price (cu)	5	6	7	8	9
Quantity demanded (kg)	90	75	60	45	30
Quantity supplied (kg)	20	40	60	80	100

(a) Identify the equilibrium price and quantity. [2] (b) State the situation at a price of 9 cu and its size. [2] (c) Explain how the market moves from 9 cu towards equilibrium. [2]

8. A farm harvests 1,000 kg of vegetables. Method 1 uses 8 workers and equipment hire of 100 cu. Method 2 uses 3 workers and equipment hire of 400 cu. All figures are per day and are illustrative.

(a) Calculate the cost per kg of each method when the daily wage is 50 cu. [2] (b) The wage rises to 80 cu a day. Calculate the cost per kg of each method and state which the farm should use. [2] (c) Explain how this shows the price mechanism answering the question “how to produce?”. [2]

9. Explain how a market system decides “for whom” goods are produced. [3]

10. The table shows weekly demand for bicycles in Town E from two groups. The figures are illustrative.

Price (cu)	100	150	200	250	300
Commuters	40	32	24	16	8
Students	30	25	20	15	10

(a) Calculate market demand at each price. [2] (b) The price falls from 250 cu to 200 cu. Calculate the percentage change in quantity demanded, to 1 decimal place. [2] (c) A new cycle lane raises demand by 10 bicycles at every price. State the new market demand and name the change. [2] (d) Explain how a rise in bus fares would affect the demand for bicycles. [2] (e) Evaluate whether the price mechanism alone ensures that those who most need bicycles obtain them. [2]

11. A new fashion makes sports shoes popular.

(a) Explain the effect on the demand curve for sports shoes. [2] (b) Explain how the price mechanism moves resources into sports shoe production. [4]

Answers

1. Demand is the quantity of a good or service buyers are willing and able to buy [1] at each price in a given period of time [1]. [2] Examiner insight: “Willing and able” is the core of the definition. Saying only “what people want” describes a want, not demand.

2. (a) Microeconomic: one decision maker in one market [1]. (b) Macroeconomic: it concerns the whole economy [1]. (c) Microeconomic: one household’s choice [1]. [3] Examiner insight: A “state” question needs little, but a short reason shows you are using scale, not the identity of the decision maker, as the test.

3. Higher demand for a good raises its price [1]. The higher price brings higher profit for producers [1]. Producers move resources into making more of that good [1]. Output of that good rises, and falling demand does the reverse, so resources move to goods people want [1]. [4] Examiner insight: For a four-mark explain question, link the steps in order. A list of separate facts about prices is weaker than the same facts joined into a chain.

4. (a) Add across each row [1]: 60, 47, 34, 21, 8 [1]. (b) As price rises, quantity demanded falls: an inverse relationship [1]. (c) At 30 cu: 10 ÷ 34 = 0.2941 [1], so 29.4% [1]. [5] Examiner insight: Show the sum for at least one row so that your method can be seen. In part (c), the denominator is the market total (34), not Customer 2’s own figure.

5. (a) The quantity rises from 21 to 34 [1], which is an extension of 13 pencils [1]. (b) 13 ÷ 21 × 100 [1] = 61.9% [1]. [4] Examiner insight: Use the starting quantity as the base. Using 34 as the base gives 38.2%, which is a different and incorrect figure.

6. (a) Multiply by 0.8: 0.8 × each quantity [1]: 40, 32, 24, 16 [1]. (b) The cause is the weather, not the price of scarves [1], so the whole curve shifts left and buyers want less at every price [1]. (c) A price rise causes a movement up and to the left along the original curve [1], a contraction of demand [1]. [6] Examiner insight: Name the cause first. “The curve shifts because the cause is not the good’s own price” is the kind of reasoning that makes a shift-versus-movement answer convincing.

7. (a) Equilibrium price 7 cu [1] and quantity 60 kg [1]. (b) At 9 cu, supply is 100 and demand is 30, so there is excess supply (a surplus) [1] of 70 kg [1]. (c) Sellers have unsold stock and cut the price [1]. As the price falls, quantity demanded rises and quantity supplied falls until they are equal at 7 cu [1]. [6] Examiner insight: Give both the direction and the size in part (b). “Surplus” alone is incomplete without 70 kg.

8. (a) Method 1: 8 × 50 + 100 = 500 cu, so 500 ÷ 1,000 = 0.50 cu per kg [1]. Method 2: 3 × 50 + 400 = 550 cu, so 0.55 cu per kg [1]. (b) Method 1: 8 × 80 + 100 = 740, so 0.74 cu per kg. Method 2: 3 × 80 + 400 = 640, so 0.64 cu per kg [1]. The farm should use Method 2 [1]. (c) A higher wage makes labour-intensive production dearer [1], so the farm switches to the cheaper method, using more equipment and fewer workers: the price of a resource has decided how to produce [1]. [6] Examiner insight: Give the working for both methods. Stating only the cheaper method gives no evidence of how you reached it.

9. Goods go to those who are willing and able to pay the market price [1]. Ability to pay depends on income [1]. People with low incomes get fewer goods, so income decides who receives output, not need alone [1]. [3] Examiner insight: The strongest answers link price to income, not just to “people who want it”.

10. (a) Add across each row [1]: 70, 57, 44, 31, 18 [1]. (b) Quantity rises from 31 to 44 [1], so 13 ÷ 31 × 100 = 41.9% [1]. (c) New demand: 80, 67, 54, 41, 28 [1]. It is an increase in demand (a shift right) [1]. (d) Buses are a substitute for bicycles [1], so more people switch to bicycles and demand shifts right [1]. (e) The price mechanism gives bicycles to those who can pay [1], so someone with a real need but low income may be left out, although those with the highest willingness to pay are served [1]. [10] Examiner insight: Weigh both sides and reach a judgement. Saying “it depends on income” once, without a counter-point, is only half an evaluation.

11. (a) Tastes have changed, a condition of demand [1], so the demand curve shifts right [1]. (b) Demand rises and the price of sports shoes rises [1]. Profit rises for makers [1]. Firms and workers move into making more sports shoes [1], and output rises as resources move away from less profitable goods [1]. [6] Examiner insight: Open with the signal (price and profit) and end with the response (resources move). The response is the step that completes the explanation.

Where marks are usually lost

• Defining demand without “willing and able” or without a price and a period.
• Saying “demand rises” when the price of the good falls.
• Using the wrong base when working out a percentage change.
• Adding a column instead of a row when aggregating individual demand.
• Naming equilibrium without giving the matching price and quantity.
• Stating a surplus or shortage without its size.
• Explaining the price mechanism with no chain of signal, response and result.
• Treating a government decision as micro or macro by who makes it, not by scale.
• Writing “evaluate” answers with only one side.

Next steps

• Review the revision notes and study guide.
• Go to the Cambridge O Level Economics hub and the checklist.
• Find your weak spots with the free diagnostics.
• Book a free trial class if any answer here surprised you.

Official syllabus

Cambridge O Level Economics 2281 syllabus for examination in 2026 (version 2), published by Cambridge Assessment International Education, part of Cambridge University Press & Assessment. This page covers sections 2.1 to 2.3.