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Economics IGCSEPDF 30
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PAST-PAPER QUESTIONs
OF
(DEMAND,SUPPLY,PRICE DETERMINATION,
&PRICE CHANGES)
Q.There was a global surplus of steel in 2017. In mid-2017, the US government considered
imposing tariffs on steel imports to protect its declining steel industry. Cheap imports from other
countries were reducing employment in the US steel industry. The pattern of US employment
was also being affected by improvements in education.
Explain how market forces will eliminate a surplus and a shortage.
[4]
MARKING SCHEME-
A surplus will be eliminated by a fall in price (1) demand will rise / supply will fall (1).
A shortage will be eliminated by a rise in price (1) demand will fall / supply will rise (1).
2 marks could be awarded for an accurately drawn demand and supply diagram showing
changes in price.
Q.The price elasticity of demand (PED) for sugar in most countries is less than 1. In 2017, the
price of sugar fell. However, the price of specialised, higher quality sugar grown in countries
such as Mauritius fell by less than the average global price. Efficient producers, such as some
farmers in Brazil that have a low fixed cost of production, were also less affected by the fall in
price.
MARKING SCHEME-
Explain two reasons why the price of sugar may fall.
[4]
Mark Scheme
•demand may fall (1)
•supply may increase (1)
•a fall in income will lower demand (1) because of less purchasing power (1)
•a fall in population will lower demand (1) as there will be fewer consumers (1)
•a change in tastes will lower demand (1) as people may find sugar less appealing (1)
•concern about health will lower demand (1) as consumers will switch to other foods (1)
•a rise in the price of a complement (1) e.g. tea (1)
•a fall in the price of a substitute (1) e.g. sweeteners (1)
•reduction in costs of production will increase supply (1) as it is likely to lead to higher profits (1)
•subsidies will increase supply (1) as they will give an incentive to firms to produce more (1)
•a cut in indirect tax will increase supply (1) as it lowers costs (1)
•good weather conditions will increase supply (1) as less of the crop will be lost (1)
•more firms in the market (1) increasing competition in the market (1)