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SingaporeEconomicsQuick questions
The Price Mechanism and Its Applications
Quick questions on Applications of demand and supply analysis explained: H2 Economics
6short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is price ceilings (maximum prices)?Show answer
A price ceiling is a legal maximum price. It only bites if set below the equilibrium. When binding:
What is price floors (minimum prices)?Show answer
A price floor is a legal minimum price. It only bites if set above the equilibrium. When binding:
What are linked markets?Show answer
Markets are connected. A shock in one spills into related markets:
What is q1?Show answer
Explain why a price ceiling causes a shortage only if it is below equilibrium. [2 marks]
What is q2?Show answer
A supply shock raises the price of butter. Explain the effect on the market for margarine. [3 marks]
What is q3?Show answer
State two consequences of a binding price floor. [2 marks]
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