Microeconomics Paper 1 questions essay plans
(2013-2019 past papers)
* Definitions of key terms & details of real life examples are on quizlet & google sheets
* Questions that can be responded in the same way or just phrased differently are placed together
Key
Past paper reference code
Question
gov = government
SR = short run
LR = long run
+ Pros / For
- Cons / Against / Counter argument
Compiled by @oatsnwaffles
, 1.1 Competitive markets: demand & supply
N18/3/ECONO/HP1/ENG/TZ0/XX
1(a) Explain how the price mechanism reallocates resources when there is an increase in demand for a good
or service. [10]
Define Demand, resources
N17/3/ECONO/HP1/ENG/TZ0/XX
1(a) With reference to demand and supply in competitive markets, explain how the economic question
“what to produce” is answered. [10]
Define Demand, supply, competitive markets
M15/3/ECONO/HP1/ENG/TZ1/XX M15/3/ECONO/HP1/ENG/TZ2/XX
1(a) Explain how changes in price work to reallocate resources in a market. [10]
Define Resource allocation, demand
N14/3/ECONO/HP1/ENG/TZ0/XX
1(a) Using diagram(s), explain the signalling and incentive functions of price. [10]
Define Signalling function, incentive function
Example Demand for ice cream increases in summer
Explain ● Demand of a good or service provides a signaling & incentive function of what firms
should produce
● an increase in demand will automatically lead to excess demand → a tendency for the
market price to increase, vice versa
○ Signaling function: more of the good is wanted
○ Incentive to firms to offer more of the good
Diagram ● Demand increases, shifts to the right
● Extension of supply from A to C
● Contraction of demand from B to C
○ as some consumers exit the market due to the increase in $
Conclusion In a free competitive market, it follows that the consumer is sovereign. The change in $
induces changes in the quantity produced & in the allocation of scarce resources, without gov
intervening.
M18/3/ECONO/HP1/ENG/TZ1/XX
1(a) With reference to the concept of excess demand, explain how a decrease in supply of a good would lead
to a new market equilibrium. [10]
Define Demand, supply, excess demand, market equilibrium
M17/3/ECONO/HP1/ENG/TZ2/XX
1(a) Explain how an increase in the costs of factors of production would affect the market price and output
of a good. [10]
Define Factors of production, market price
Example $ of cotton increases, clothing producers would decrease their supply due to increased costs
of factors of production; price level would increase
Explain ● Higher costs make it more difficult to earn profits, ceteris paribus
○ becomes more expensive to produce more units per period of time using the existing
Compiled by @oatsnwaffles
(2013-2019 past papers)
* Definitions of key terms & details of real life examples are on quizlet & google sheets
* Questions that can be responded in the same way or just phrased differently are placed together
Key
Past paper reference code
Question
gov = government
SR = short run
LR = long run
+ Pros / For
- Cons / Against / Counter argument
Compiled by @oatsnwaffles
, 1.1 Competitive markets: demand & supply
N18/3/ECONO/HP1/ENG/TZ0/XX
1(a) Explain how the price mechanism reallocates resources when there is an increase in demand for a good
or service. [10]
Define Demand, resources
N17/3/ECONO/HP1/ENG/TZ0/XX
1(a) With reference to demand and supply in competitive markets, explain how the economic question
“what to produce” is answered. [10]
Define Demand, supply, competitive markets
M15/3/ECONO/HP1/ENG/TZ1/XX M15/3/ECONO/HP1/ENG/TZ2/XX
1(a) Explain how changes in price work to reallocate resources in a market. [10]
Define Resource allocation, demand
N14/3/ECONO/HP1/ENG/TZ0/XX
1(a) Using diagram(s), explain the signalling and incentive functions of price. [10]
Define Signalling function, incentive function
Example Demand for ice cream increases in summer
Explain ● Demand of a good or service provides a signaling & incentive function of what firms
should produce
● an increase in demand will automatically lead to excess demand → a tendency for the
market price to increase, vice versa
○ Signaling function: more of the good is wanted
○ Incentive to firms to offer more of the good
Diagram ● Demand increases, shifts to the right
● Extension of supply from A to C
● Contraction of demand from B to C
○ as some consumers exit the market due to the increase in $
Conclusion In a free competitive market, it follows that the consumer is sovereign. The change in $
induces changes in the quantity produced & in the allocation of scarce resources, without gov
intervening.
M18/3/ECONO/HP1/ENG/TZ1/XX
1(a) With reference to the concept of excess demand, explain how a decrease in supply of a good would lead
to a new market equilibrium. [10]
Define Demand, supply, excess demand, market equilibrium
M17/3/ECONO/HP1/ENG/TZ2/XX
1(a) Explain how an increase in the costs of factors of production would affect the market price and output
of a good. [10]
Define Factors of production, market price
Example $ of cotton increases, clothing producers would decrease their supply due to increased costs
of factors of production; price level would increase
Explain ● Higher costs make it more difficult to earn profits, ceteris paribus
○ becomes more expensive to produce more units per period of time using the existing
Compiled by @oatsnwaffles
