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S4 Economics Demand and Supply Practice Paper 4 | Equilibrium Calculations, Elasticity and Specific Tax: 10 Questions with Answers
S4 Economics Demand and Supply Practice Paper 4 | Equilibrium Calculations, Elasticity and Specific Tax: 10 Questions with Answers
Ten demand and supply questions in a fourth paper, moving from the law of demand and equilibrium calculations to price elasticity of demand, consumer surplus and the sharing of a per-unit tax, with answers and a one-line explanation.
Direct answers This paper has 10 questions covering the law of demand, equilibrium calculations, price elasticity of demand, consumer surplus and the sharing of a per-unit tax; suggested time is 20 minutes.
01 Paper details (check answers afterwards)
| Item | Detail |
|---|---|
| Questions | 10 |
| Suggested time | 20 minutes |
| Difficulty mix | Foundation 3 · Intermediate 4 · Challenge 2 · Error redo 1 |
| Chapter | S4 Economics: Demand and Supply |
| Level | S4 (DSE) |
02 Questions (10 items)
- FoundationWhat is the law of demand?
- FoundationUnder what condition does a market equilibrium arise?
- FoundationWhen the price elasticity of demand is greater than 1, that is elastic, what does a price rise do to total revenue?
- IntermediateDemand Qd = 240 – 6P and supply Qs = 60 + 6P. Find the equilibrium price and quantity.
- IntermediateFollowing the previous question, what is the price elasticity of demand at equilibrium, and is demand elastic or inelastic?
- IntermediateFollowing the previous question, if the market price is 20, does the market show a surplus or a shortage, and by how much?
- IntermediateFollowing the previous question, if the market price is 10, does the market show a surplus or a shortage, and by how much?
- ChallengeFollowing the previous question, what is consumer surplus at equilibrium? The demand curve meets the price axis at P = 40.
- ChallengeThe government imposes a per-unit tax of $4, so supply becomes Qs = 60 + 6(P – 4). Find the new equilibrium, tax revenue, tax burden sharing and deadweight loss.
- Error redoWhat is wrong with the claim that a specific tax is paid by the seller, so the whole burden falls on producers?
03 Answers and one-line notes
| # | Answer | One-line note |
|---|---|---|
| 1 | Other things being equal, quantity demanded falls when price rises and rises when price falls. | Price and quantity demanded are inversely related, which is why the demand curve slopes downwards. |
| 2 | When quantity demanded is exactly equal to quantity supplied, and that price is the equilibrium price. | The quantity buyers want equals the quantity sellers want, so there is neither shortage nor surplus. |
| 3 | Total revenue falls. | Quantity demanded falls by a larger percentage than price rises, so revenue falls. |
| 4 | P = 15, Q = 150. | Set Qd = Qs: 240 – 6P = 60 + 6P, so 12P = 180. |
| 5 | 0.6, which is inelastic. | Elasticity = slope 6 * price 15 / quantity 150. |
| 6 | A surplus of 60 units. | Qd = 120 and Qs = 180, so excess supply is 60. |
| 7 | A shortage of 60 units. | Qd = 180 and Qs = 120, so excess demand is 60. |
| 8 | 1,875. | Area of the triangle: (40 – 15) * 150 / 2. |
| 9 | P = 17, Q = 138; tax revenue 552; buyers and sellers each bear $2; deadweight loss 24. | 240 – 6P = 36 + 6P gives P = 17; 4 * 138 = 552; the deadweight loss triangle is half of 4 * 12 = 24. |
| 10 | The burden is shared according to the elasticities of demand and supply, not by who legally pays; here the two curves have the same slope, so buyers and sellers each bear half. | The more inelastic side cannot escape and therefore bears more of the tax. |
04 What to do after marking
- After marking, redo only the wrong items and write down which step went wrong (formula, unit, or misread number).
- Repeat the same item two days later; move to the next paper only when both attempts are correct.
- Parents only need the answer and note columns; there is no need to explain every item.
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