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Adam Smith Economics Tuition Agency

GCE A-LEVEL ECONOMICS REVISION
TOPIC: Market Demand and Supply Theory & Elasticities
QN1: The booming property market will drive prices of private housing above the 1996 peak by
the middle of next year.
Source: The Straits Times, 16 Jul 2007
(a) Using demand and supply analysis, explain why housing prices are rising.

[10]

(b) With reference to relevant elasticity concepts, discuss the impact of the booming property
market on the developers of private housing.
[15]

QN2: Reuters news reported that Apple Inc sold a million units of iPhone on the first weekend,
more than the expected demand. But iPod sales have been declining even as its price has been
falling.
Discuss how demand, supply, and the elasticity concepts can be used to explain the market
behaviour described above.
[25]
QN3: Discuss how the Singapore government might use the concepts of price elasticity of
demand and income elasticity of demand to achieve its economic objectives.
[25]
QN4: The Singapore F1 Grand Prix scheduled in Sep 2008 will not only be the biggest sporting
hosted by Singapore, but it is set to make history as the first-ever night race in F1 history. To
defray the cost of hosting the event, a tax will be imposed on hotel accommodation.
(a) With the aid of a diagram, explain the possible effects of the Singapore F1 Grand Prix on the
market for hotel accommodation.
[10]
(b) Discuss the usefulness of the elasticity concepts of demand to the operator of a hotel chain in
Singapore.
[15]
QN5: Nov 2003
Explain the concepts of PED, YED, indicating why elasticities are different
for different products.
[12]
(a) Discuss how the supplier of a product that is currently fashionable might use both of these
concepts in making price and output decisions.
[13]

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QN6: Nov 2004

The terrorist attacks on New York on 11 Sep 2001 caused a worldwide
recession and an increased fear of flying, both of which severely affected the demand for travel by
air. This led to the closure of some of the major airlines in the world.
a) With the aid of a diagram, explain how the recession and the closure of some of the major
airlines in the world affected the market for air travel.
[10]
b) Assess the relevance of PED, YED, XED and PES in explaining the effects of these events on
the airline industry.
[15]

QN7: Nov 2005

Discuss how the Spore government might use the concepts of PED and
YED to determine the impact of a fall in exchange rates and a rise in worldwide incomes on the
current account of the Spore BOP.
[25]

QN8: Nov 2007

In 2005 the rate of GST in Spore rose from 3% to 5%. Incomes rose by approximately 4.5% in
2005.
(a) Explain the likely effect of this change in GST on expenditure by consumers on different types
of goods.
[10]
(b) Discuss whether the combined effect on the rise in incomes and the rise in GST is likely to
cause the quantities of different types of goods sold to rise or fall.
[15]

QN9: Nov 2008

Developments in modern technology, such as faster broadband internet
connections, portable DVD players, iPods and MP3 players, have had major impacts on the
demand and supply of recorded music and associated products.
Assess how the markets involved might be affected by these developments.

QN10: Nov 2009

years.

[25]

There have been large changes in the price of crude oil over the past few

Discuss what determines whether consumers or producers are more likely to bear the cost of these
oil price changes.
[25]

Case Study Question: Coffee Price Economics

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