How many points does a comparison need?

At least three: quantity traded, deadweight loss, and where the price gap or rent ends up.

Why is a minimum wage not a price ceiling?

It sets a floor that forbids paying less, so it creates a labour surplus rather than a shortage.

S5 Economics | Price Control and Quota Practice Paper 3 (Challenge)

2026-11-04

Policy comparison: the cost of government purchases, minimum wages and rent control, and auctioned quotas against a plain price cap, all with figures.

Attempt first, mark afterwards　Allow about forty minutes; comparison answers must give quantity traded, deadweight loss and who receives the rent on both sides.

01　Paper details (check answers afterwards)

Item	Detail
Questions	10 items
Suggested time	About 40 minutes
Difficulty mix	Foundation 4 · Intermediate 3 · Challenge 2 · Error redo 1
Chapter	Chapter: S5 Economics \| Price Control and Quota
Level	S5 (Secondary 5) Economics

02　Questions (10 items)

FoundationIf the government promises to buy all unsold output to support a price floor, what must be calculated?
FoundationWith a 40 floor in market B and full government purchase, how much does the government spend?
FoundationIs a minimum wage a price floor or a price ceiling, and does it create a surplus or a shortage?
FoundationWhen rent control sets a ceiling below the market rent, what usually appears?
IntermediateWhat is the deadweight loss of the 40 floor in market B?
IntermediateIf the government does not buy, what do producers actually receive, against the free market?
IntermediateThe 15 ceiling and the 60-unit quota trade the same quantity. How do consumer prices differ?
ChallengeIf the government auctioned the 60 quotas instead, what revenue arises, compared with a plain ceiling?
ChallengeComparing the 15 ceiling with the 60-unit quota, which statement holds?
Error redoError drill: a student says under a binding ceiling the price is set by demand. What is correct?

03　Answers and one-line notes

#	Answer	One-line note
1	Government spending equals the surplus quantity times the floor price	The buying price is the floor itself, so spending is the surplus multiplied by that price.
2	1200 (surplus of 30 units times 40)	First the surplus 80 minus 50 is 30, then multiply by 40.
3	A price floor, creating a surplus of labour, that is unemployment or fewer hours	A minimum wage forbids paying less, exactly like a floor on goods.
4	A shortage of flats, queues or ballots, and side payments such as key money	The ceiling cuts returns, so supply falls while demand rises and the gap is rationed by non-price means.
5	75	Trade is 50, the last unit is valued 40 against a supply price of 25, so 0.5 × 10 × 15 = 75.
6	2000 (50 units at 40), which is -200 less than the 1800 earned without control	Free-market revenue is 30 × 60 = 1800, while the floor sells only 50 units, so revenue falls.
7	Under the ceiling consumers pay 15, under the quota they pay 30, and the 15 gap goes to quota holders	A ceiling presses the price down while a quota only caps quantity, leaving the price on the demand curve.
8	The government collects 900 (the auction price equals the quota rent); with a 15 ceiling that 900 goes to nobody	Both carry the same 150 deadweight loss; the difference is who receives the 900.
9	Both trade the same quantity with the same deadweight loss, but the quota lets the government or licence holders collect 900 of rent	A ceiling evaporates the price gap through queues and black markets, while a quota turns it into distributable rent.
10	The price is the ceiling, and quantity is set by supply, since QS < QD and the short side rules	Once the price is fixed, the short side of the market determines quantity, a general rule for price controls.

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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