Economics
Demand, supply and elasticities
- 1.
A fall in the price of tea increases tea purchases. Explain why this is not itself an increase in demand.
[2 marks] · no calculator - 2.
Fictional market: Qd = 120 - 2P and Qs = 20 + 3P, where quantities are units per day and P is currency units. Calculate equilibrium price and quantity.
[3 marks] - 3.
Fictional case: Sora raises ticket prices from 10 to 12; sales fall from 1000 to 850. Using initial values as percentage-change bases, calculate PED and both revenues; explain the revenue change.
[4 marks] - 4.
Fictional case: the price of bus travel rises 8% and demand for rail travel rises 12%, with other determinants fixed. Calculate cross elasticity and analyse what could weaken the inference that the modes are substitutes if the ceteris paribus assumption fails.
[4 marks] - 5.
Fictional case: a city caps rents below equilibrium while housing supply responds slowly. Evaluate whether the cap alone can improve access for all prospective tenants.
[4 marks] · no calculator - 6.
Fictional case: Mira's fuel demand is inelastic initially but households can switch to electric transport over several years. Evaluate using the initial elasticity to forecast long-term revenue from a fuel-price rise.
[4 marks] · no calculator
Marking points are indicative, not an official mark scheme. Accept equivalent valid methods and supported interpretations that address the task; award each mark once without requiring the model wording.