These eight questions use invented places and numbers. Write your own answer first, then open each explanation.
You can attempt them against the clock with the timed original practice session builder. The skills come from the lessons in Economics.
Questions 1 to 4: chains and diagrams
Question 1. The price of flour rises for a fictional fish-ball maker in Pulau Sendiri. Explain the effect on the supply of fish balls.
Answer
Higher flour prices raise the cost of production, so profit per fish ball falls at every price. Producers offer fewer fish balls at each price, so supply shifts left.
With demand unchanged, the price of fish balls rises and the quantity traded falls.
Question 2. A market has prices of RM3, 4, 5 and 6, with old demand of 120, 100, 80 and 60 units, and supply of 40, 60, 80 and 100 units. Demand then rises by 40 units at every price. Find the new equilibrium.
Answer
The old equilibrium is RM5 and 80 units. New demand is 160, 140, 120 and 100 units. At RM5, demand is 120 and supply is 80, so there is a shortage of 40.
At RM6, new demand is 100 and supply is 100. The new equilibrium is RM6 and 100 units.
Question 3. Name the three things that must appear on a diagram showing this shift, apart from the curves.
Answer
The axes with variable and unit, the original and new equilibrium points, and an arrow showing the direction of the shift. Label the curves D, D1 and S.
Question 4. A student writes: “Price rises because of the bad weather.” Improve it.
Answer
Add the mechanism: “Bad weather damaged the crop, so sellers can offer fewer units at each price. Supply shifts left, creating a shortage at the old price. Competition between buyers pushes the price up and quantity traded falls.”
Questions 5 to 8: data and evaluation
Question 5. A fictional stall sells 210 cups in week 1 (6 days open) and 168 cups in week 2 (4 days open). A student claims sales fell. Comment.
Answer
Per day, week 1 is 210 ÷ 6 = 35 and week 2 is 168 ÷ 4 = 42. Daily sales rose, so the claim that sales fell uses unlike bases. The totals fell only because the stall opened for fewer days.
Question 6. Classify each as an assumption or an observed fact: (a) all buyers have the same income, (b) the stall sold 210 cups in week 1.
Answer
(a) is an assumption, a condition taken as given. (b) is an observed fact, because it is recorded in the data. See separating a model assumption from an observed fact.
Question 7. A fictional town sets a maximum price of RM3 for a packet that sells at RM4. At RM3, buyers want 90 packets and sellers offer 60. State the result and one assumption.
Answer
The shortage is 90 − 60 = 30 packets. One assumption: sellers follow the cap and no other supplier enters. The result is conditional on that.
Question 8. “A price cap always helps poorer buyers.” Evaluate using only the question-7 figures.
Answer
The figures show a shortage of 30 packets. They do not show who buys the 60 packets that are sold, nor any buyer’s income. So “always” and “poorer buyers” go beyond the data. A supported statement is “the cap lowers the price to RM3 but leaves 30 packets of demand unmet”.
If you got some wrong
Questions 1, 2 and 4 link to writing cause, mechanism, effect explanations and using diagrams to support an answer. Questions 7 and 8 link to stating assumptions and limitations.
If you want a teacher to read your answers, see online one-to-one Economics tuition.