OCR A Level Economics: Equilibrium, volatility and the supply and demand model (H460) – 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 follow the OCR A Level Economics (H460) specification, Version 3.0 (June 2026), first assessment 2021: the second half of “Supply and demand and the interaction of markets”. All data are invented. Draw each diagram on paper as you answer. Read the study guide and revision notes first if needed. See also the course hub and checklist.

Questions

1. The table shows demand and supply in a market for a good in Country A (illustrative).

Price (£)	2	4	6	8	10
Quantity demanded	140	120	100	80	60
Quantity supplied	40	70	100	130	160

(a) State the equilibrium price and quantity. [1] (b) Calculate the excess at a price of £10 and at £2, naming each. [2] (c) Explain what happens to price from £10. [1]

2. In a market, Qd = 480 − 16P and Qs = −120 + 24P (P in £).

(a) Calculate the equilibrium price and quantity. [2] (b) Higher incomes raise quantity demanded by 60 at every price. Find the new equilibrium and the percentage rise in price. [3]

3. A bond pays a fixed £45 a year.

(a) Calculate its yield at a price of £900 and at £750. [2] (b) Explain, using demand and supply, why the bond price might fall. [2]

4. In the labour market for care workers in Region C, Ld = 700 − 25w and Ls = −100 + 25w (w in £ per hour).

(a) Calculate equilibrium wage and employment. [2] (b) An ageing population shifts labour demand to Ld = 750 − 25w. Explain why labour demand is a derived demand, and calculate the new equilibrium. [3]

5. Demand for beef rises. Cattle are reared for both beef and hides.

(a) Explain the effect on the market for hides. [4] (b) Explain the effect on the market for chicken, a substitute. [2]

6. A concert hall has 3,200 seats. At the fixed ticket price of £35, demand is 4,500. Explain the type of disequilibrium and two consequences. [4]

7. In a farm market, supply is fixed within a season. Demand is Qd = 135 − 5P. Normal supply is 90 units, a poor harvest gives 72 units, and a bumper harvest gives 108 units.

(a) Calculate the price in each case and the percentage price change from normal. [3] (b) With more elastic demand, Qd = 270 − 20P, the poor-harvest price is £9.90 and the bumper price is £8.10. Compare the volatility. [2] (c) Explain two reasons why farm prices may be volatile. [3]

8. Farmers decide output from last year’s price. Qd = 132 − 4P and Qs = 12 + 2P(last year). The first year’s price is £24.

(a) Calculate the equilibrium price and the next three prices. [3] (b) State why the prices settle. [1]

9. A tram has 400 seats. Peak demand is Qd = 900 − 50P and off-peak demand is Qd = 500 − 50P. The flat fare is £4.

(a) Calculate the excess demand at peak and the spare seats off-peak. [2] (b) Calculate the market-clearing fare for each period. [2] (c) Evaluate whether the model is useful here. [3]

10. Explain two assumptions of the model of supply and demand. [4]

11. “The supply and demand model is of limited use in analysing the housing market in Country A.” Evaluate this view. [10]

Answers

1. (a) Equilibrium is £6 and 100 units, where quantities match. [1] (b) At £10, Qs is 160 and Qd is 60, a surplus of 100. [1] At £2, Qd is 140 and Qs is 40, a shortage of 100. [1] (c) The surplus pushes the price down towards £6. [1] Examiner insight: name the excess and give its size as well as the direction, because a bare “surplus” leaves the quantity unstated.

2. (a) 480 − 16P = −120 + 24P gives 600 = 40P, so P = £15. [1] Q = 480 − 240 = 240. [1] (b) New demand is Qd = 540 − 16P, so 660 = 40P. [1] P = £16.50 and Q = 276. [1] The price change is (16.5 − 15)/15 = 10%. [1] Examiner insight: show the line where the two equations are set equal. A correct number with no working leaves nothing to assess if a slip occurs.

3. (a) 45/900 = 5%. [1] 45/750 = 6%. [1] (b) Fewer buyers want the bond, so demand shifts left. [1] At the lower price the yield is higher, which restores demand. [1] Examiner insight: link the price change to a named shift. A line that says “yield rises” without the demand change is only half of the chain.

4. (a) 700 − 25w = −100 + 25w gives 800 = 50w. [1] w = £16 and L = 300. [1] (b) Firms hire workers only to produce goods that people buy, so more demand for care raises labour demand. [1] 850 = 50w, so w = £17. [1] L = 325. [1] Examiner insight: the derived demand explanation needs the product market named. Saying “labour is needed for production” alone is general.

5. (a) Higher beef demand raises the beef price and encourages farmers to rear more cattle. [1] Hides come from the same process, so they are in joint supply. [1] Hide supply shifts right. [1] The hide price falls and the quantity traded rises. [1] (b) The beef price rises, so some buyers switch to chicken. [1] Demand for chicken shifts right, and its price and quantity rise. [1] Examiner insight: name the relationship (joint supply, substitute) and the curve that moves. Descriptions of the knock-on effect without a curve are vague.

6. At £35, demand exceeds supply by 4,500 − 3,200 = 1,300, a shortage (excess demand). [1] The price is sticky or set below the level that would clear the market. [1] Consequence one: resale of tickets at higher prices. [1] Consequence two: queues or rationing by luck. [1] Examiner insight: give the size of the shortage and apply the consequences to the context of tickets, not to a generic market.

7. (a) P = (135 − Q)/5. Normal: £9. [1] Poor harvest: (135 − 72)/5 = £12.60, up 40%. [1] Bumper: (135 − 108)/5 = £5.40, down 40%. [1] (b) Output changes by 20% in both cases. [1] Price moves by 40% with steep demand but only 10% with elastic demand, so flatter demand reduces volatility. [1] (c) Supply is fixed in the short run by the harvest or growing time, so it cannot respond to price. [1] Demand for food is inelastic, so small output shocks cause large price changes. [1] Weather or speculation creates frequent shocks. [1] Examiner insight: percentage changes in price and output compared with each other make the argument. Keep the same output changes in part (b) as in part (a), so that only the elasticity differs.

8. (a) Equilibrium: 132 − 4P = 12 + 2P, so P = £20. [1] Year 2: Qs = 12 + 48 = 60, so P = (132 − 60)/4 = £18. [1] Year 3: Qs = 48, P = £21. Year 4: Qs = 54, P = £19.50. [1] (b) Supply responds less strongly to price than demand does, so each swing is smaller. [1] Examiner insight: show Qs from last year’s price before finding the new price. Jumping straight to the answer makes slips hard to trace.

9. (a) At £4 peak demand is 900 − 200 = 700, so excess demand is 300. [1] Off-peak demand is 300, so 100 seats are empty. [1] (b) Peak: 900 − 50P = 400, so P = £10. [1] Off-peak: 500 − 50P = 400, so P = £2. [1] (c) Useful: it explains overcrowding at peak, spare capacity off-peak and why peak fares are higher. [1] Limited: fares may be regulated or subsidised, and travellers impose congestion costs on each other that price ignores. [1] Judgement: it is a good guide to the pressure on capacity, but a poor guide to the fare that should be charged. [1] Examiner insight: an evaluation earns more when it ends with a judgement tied to this market rather than a list of limitations.

10. Assumption one, such as many buyers and sellers who are price takers. [1] Explanation: no single trader can move the price, so the market price is set by overall demand and supply. [1] Assumption two, such as full information or ceteris paribus. [1] Explanation: with full information buyers and sellers act on the true price and quality; with ceteris paribus only one factor changes at a time, which allows a clear prediction. [1] Examiner insight: each assumption needs its own explanation of what it does in the model. Naming four without explaining any is less effective.

11. Model’s strengths: a rise in demand with slow supply raises prices. [1] In the short run the stock of homes is fixed, so the supply curve is steep. [1] Example: when demand shifts from Qd = 2,000 − 10P to 2,100 − 10P with 800 homes, price rises from 120 to 130 thousand, which is 8.33%. [2] Limitations: homes differ in location and quality, so there is no single market price. [1] Buying is costly and infrequent, so adjustment is slow. [1] Credit availability and expectations shift demand and may amplify price moves. [1] Planning rules limit supply. [1] Evaluation: the model gives a reliable direction of change, but limited detail on timing or size, and works best alongside local evidence. [1] Judgement: “limited” is fair for forecasting but too strong for explaining the basic pressure on prices. [1] Examiner insight: use the figures, name the specific assumptions that fail and finish with a judgement on the word “limited”.

Where marks are usually lost

• Leaving out working in an equilibrium calculation.
• Giving a surplus or shortage with no size or direction of price change.
• Shifting a curve when the cause is the good’s own price.
• Naming a related market with no link, such as substitute or joint supply.
• Stating certain results for both price and quantity when two curves shift.
• Listing limitations of the model without judging them.
• Using general answers on volatility instead of linking steep curves to large price swings.
• Not applying answers to the market named in the question.

Next steps

• Review the revision notes and the study guide.
• Check progress against the course hub and the checklist.
• Try the free 10-minute diagnostics to find your weakest area.
• Book a free trial class.

Official syllabus

OCR, A Level in Economics (H460) specification, Version 3.0 (June 2026), first assessment 2021.