IB DP Economics: Supply – 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 – the IB holds copyright in its own papers. Use these alongside the official past papers available through your school or the IB store.

Written against the IB Diploma Programme Economics guide (first assessment 2022, published February 2020), the course examined from the 2022 session onwards, the set covers sub-topic 2.2 Supply for SL and HL. Questions 9 and 12 are HL only. Every country, firm and market is invented and illustrative, and every figure has been checked. The [1] points in the answers are a revision aid showing where credit is earned, not an IB mark scheme.

Revise first with the study guide or the revision notes. Course pages: IB DP Economics hub and the printable checklist.

Questions

1. Define the law of supply. [2]

2. In the fictional country of Kestria, firms X and Y make cycle helmets. Their weekly supply is shown below (units per week).

Price (tarns)	Firm X	Firm Y
20	40	10
30	60	30
40	80	60

(a) Calculate market supply at each price. [3] (b) A third firm, Z, enters and supplies 15, 25 and 35 at the three prices. Calculate the new market supply at a price of 30. [1]

3. In the fictional country of Orvale, cocoa is a storable crop. For each event, say whether it is a movement along the supply curve of cocoa or a shift of it, and give the direction. [5] (a) The price of cocoa rises. (b) The price of fertiliser falls. (c) The government introduces a per-unit tax on cocoa. (d) More growers enter the market. (e) Growers expect the price of cocoa to be higher next season.

4. The fictional government of Lumeria gives tea producers a subsidy of 5 tarns per kilogram. Draw a diagram, described in words if you cannot sketch it, and explain the effect on the supply of tea. [4]

5. The weekly supply of notebooks in a fictional market is 100 at a price of 3, 200 at 4, 300 at 5, 400 at 6 and 500 at 7. A per-unit tax of 2 tarns is introduced. (a) Calculate the quantity supplied after the tax at prices of 5, 6 and 7. [3] (b) Say which way the curve moves. [1]

6. Beef and leather are produced together. Explain, with reference to joint supply, what happens to the supply of leather when the price of beef rises. [3]

7. A fictional farmer can use the same field for maize or soya. The price of soya rises. Explain the effect on the supply of maize. [3]

8. Dried bean growers in a fictional country can store their crop for several months. Explain why current supply may fall if growers expect a higher price next month. [3]

9. (HL only) A pottery has one kiln and pays each worker 60 tarns per day. The extra mugs each worker adds are 15, 12, 10, 6 and 4 for workers 1 to 5. (a) Calculate the marginal cost of a mug for each worker. [3] (b) State the number of mugs supplied at a price of 6 tarns if the pottery produces while price at least covers marginal cost. [2]

10. The table shows the weekly supply of shrimp in the fictional market of Vessia (tonnes).

Price (tarns per kg)	6	8	10	12
Quantity supplied	200	300	400	500

(a) New shrimp farms enter and add 60 tonnes at each price. Write the new supply schedule. [2] (b) The government then pays a subsidy of 2 tarns per kg. Using the schedule from (a), calculate the quantity supplied at prices of 6, 8 and 10. [3] (c) For each change, explain whether supply moves along its curve or the curve itself shifts. [3]

11. Distinguish between individual supply and market supply, and between a movement along and a shift of the supply curve. [4]

12. (HL only) Explain how diminishing marginal returns and increasing marginal costs help to account for the upward slope of the supply curve. [5]

Answers

1. Other things being equal (ceteris paribus), [1] a higher price leads to a greater quantity supplied (and a lower price to a smaller quantity). [1] [2] Examiner insight: Give the price and quantity link and state the ceteris paribus condition as a separate point, so the definition is complete.

2. (a) At 20: 40 + 10 = 50. [1] At 30: 60 + 30 = 90. [1] At 40: 80 + 60 = 140. [1] [3] (b) At 30: 60 + 30 + 25 = 115. [1] [1] Examiner insight: For a calculate question, set out each addition; a bare answer risks losing the working mark if one total is slipped.

3. (a) Movement along the curve (expansion), because the good’s own price changed. [1] (b) Shift right (increase), since lower input costs reduce cost per unit. [1] (c) Shift left (decrease; equivalently up), since a tax raises cost per unit. [1] (d) Shift right (increase), since more firms supply at each price. [1] (e) Shift left (decrease) for a storable good, since growers hold back stock now. [1] [5] Examiner insight: Naming “shift” without a direction does not complete the answer; state both the type of change and the direction.

4. The diagram has price on the vertical axis and quantity of tea per period on the horizontal axis, with an upward-sloping curve labelled S1. [1] A second curve S2 is drawn parallel to S1 and below it, with the vertical gap equal to 5 tarns. [1] The subsidy lowers producers’ cost per kilogram, so they will supply each quantity at a price 5 lower. [1] Supply increases (a shift right), and the quantity supplied at every price is higher. [1] [4] Examiner insight: A diagram earns credit only when the axes and curves are labelled and the shift is stated in words as an increase in supply.

5. (a) After the tax, quantity at price P equals the old quantity at P - 2, because 2 tarns goes to the government. [1] At 5: old quantity at 3 = 100. At 6: old quantity at 4 = 200. [1] At 7: old quantity at 5 = 300. [1] [3] (b) Upward (equivalently left): supply decreases. [1] [1] Examiner insight: Show the rule you used for the tax; a correct list with no stated method is harder to credit if one value is wrong.

6. A higher price of beef gives producers an incentive to raise more cattle, which is a movement along the supply of beef. [1] Leather is a by-product of the same animals, so more leather is produced at any given price of leather. [1] The supply of leather increases (shifts right). [1] [3] Examiner insight: Name the link between the two goods; saying only that “supply goes up” without the joint production reason is a common gap.

7. Maize and soya compete for the same land, so this is competitive supply. [1] A higher soya price makes soya more profitable, so the farmer switches land away from maize. [1] The supply of maize decreases (shifts left). [1] [3] Examiner insight: Competitive supply needs the idea of switching resources; a bare statement that the two goods are “related” earns little.

8. Producers who can store the good may prefer to sell at the higher expected price next month. [1] They hold back some stock now, so less is offered at each current price. [1] Current supply decreases (shifts left). [1] [3] Examiner insight: The explanation depends on the good being storable, so mention storage; without it the reasoning is unsupported.

9. (a) Marginal cost = wage ÷ extra mugs. [1] Worker 1: 60 ÷ 15 = 4; worker 2: 60 ÷ 12 = 5; worker 3: 60 ÷ 10 = 6. [1] Worker 4: 60 ÷ 6 = 10; worker 5: 60 ÷ 4 = 15 tarns. [1] [3] (b) The first three workers have marginal cost of 4, 5 and 6, all at most 6. [1] Output = 15 + 12 + 10 = 37 mugs. [1] [2] Examiner insight: For HL calculations, show the formula first, then say that marginal cost rises as marginal product falls; that link strengthens the answer.

10. (a) Add 60 to each quantity: 260, 360, 460, 560. [2] [2] (b) The subsidy of 2 means the quantity at price P equals the quantity at P + 2 on the schedule from (a). [1] At 6: 360. At 8: 460. [1] At 10: 560. [1] [3] (c) Entry of firms changes the number of firms, not the price, so it is a shift (right). [1] The subsidy lowers cost per unit, a non-price determinant, so it is a second shift (right). [1] Neither is a movement along the curve, because the good’s own price did not cause the change. [1] [3] Examiner insight: A multi-part sequence is marked part by part, so use your own schedule from (a) in (b); a correct method on a wrong earlier answer can still earn credit.

11. Individual supply is one producer’s quantities at each price. [1] Market supply is the sum of all producers’ quantities at each price. [1] A movement along occurs when only the good’s own price changes. [1] A shift is caused by a non-price determinant such as costs, technology or number of firms. [1] [4] Examiner insight: A distinguish response has to state how the two items differ, not just define each in turn.

12. With a fixed input such as a kiln, adding more of a variable input eventually gives a smaller extra output (diminishing marginal returns). [1] If each worker is paid the same wage, the cost of each extra unit of output therefore rises. [1] This is increasing marginal cost. [1] Producers will expand output only if the price covers the higher marginal cost of the last unit. [1] So a higher price is needed for a larger quantity supplied, giving an upward-sloping supply curve. [1] [5] Examiner insight: Chain the three links in order (returns, then cost, then slope); listing the terms without connecting them is the usual shortfall on HL explain questions.

Where marks are usually lost

• Leaving out ceteris paribus in a definition of the law of supply.
• Calling a price change a shift, or a determinant change a movement.
• Stating a shift without saying whether supply increased or decreased.
• Moving a tax or subsidy shift the wrong way.
• Not showing the addition in market supply calculations.
• Confusing joint supply with competitive supply.
• Forgetting that expectations only reduce current supply for goods that can be stored.
• On HL questions, naming diminishing returns without linking to marginal cost and the slope of the curve.

Next steps

• Revise with the revision notes or reread the study guide.
• See the IB DP Economics hub and the printable checklist.
• Take one of the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

IB Diploma Programme Economics guide, first assessment 2022, published by the International Baccalaureate Organization (February 2020). Sub-topic 2.2 Supply.