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Unit 2 · The price system and the microeconomy

Unit 2 essay review checklist

Every piece of knowledge, every analysis chain and every evaluation point that the 54 Unit 2 Paper 2 essay questions in the bank (2020–2025) ask for. Tick an item only when you can explain it from memory, out loud or on paper, without looking.

清单条目使用英文，也就是考试作答所用的语言。标题、按钮和说明仍为中文。

0 / 112 ticked

How to use this checklist
  1. Cover the page and try each item out loud or on paper. Tick it only when you got it right without looking.
  2. Items with a diagram: draw it yourself first, then open it to compare.
  3. Use the 'Asked in' links to open the real questions that need an item, and write one of them.
  4. Work on the items you cannot tick first. 'Hide ticked' shows only those.
  5. Before a test, print the checklist and go through it again on paper.

2.1Demand and supply curves

Chapter 7 notes → · 3 essays set on this section ·

The 3 past-paper questions on this section
  1. 9708/23/M/J/25 Semi-conductors are widely used in the production of many types of electronic goods such as smartphones. It has been estimated that the price elasticity of supply for semi-conductors is 0.2 in the short run and 0.8 in the long run. (b) Assess the likely effects on resource allocation of a continuing increase in demand for semi-conductors. [12]
  2. 9708/22/O/N/24 (a) With the help of a diagram(s), briefly explain how the cause of a movement along the demand curve differs from the cause of a shift in the demand curve and consider the impact on the demand for one good of price changes in other goods. [8]
  3. 9708/21/O/N/24 (a) Explain the determinants of supply for an agricultural product, such as rice, and consider which of these determinants is likely to be of the greatest significance at the present time. [8]

Knowledge and understanding (AO1)

Analysis: the chains (AO2)

  • Asked in 23/M/J/24 21/O/N/23 (a) 21/M/J/20 22/F/M/20 (a)
    1 more22/M/J/23 (a)
    Show the diagrams
    Quantity PriceD₁D₂SP₁Q₁P₂Q₂
    Demand Shift Right · Open the diagram sheet
    Quantity PriceD₁D₂SP₁Q₁P₂Q₂
    Demand Shift Left · Open the diagram sheet
  • Asked in 22/O/N/24 (a) 22/O/N/24 23/M/J/24 23/M/J/24 (b)
    Show the diagrams
    Quantity PriceD₁D₂SP₁Q₁P₂Q₂
    Demand Shift Right · Open the diagram sheet
    Quantity PriceD₁D₂SP₁Q₁P₂Q₂
    Demand Shift Left · Open the diagram sheet
  • Asked in 23/M/J/24 21/M/J/20 23/M/J/24 (b)
  • Asked in 22/M/J/25 (a) 21/O/N/24 (a) 21/O/N/24
    Show the diagram
    Quantity PriceDS₁S₂P₁Q₁P₂Q₂
    Supply Shift Right · Open the diagram sheet
  • Asked in 22/M/J/25 (a)
    Also asked in · Unit 1 22/M/J/21
    Also asked in · Unit 3 22/F/M/24 (a)
    Show the diagrams
    Quantity PriceDSS−sGovt cost = s × Q₂DWLsubsidyQ₁P₁Q₂PcPp
    Subsidy (Per Unit) · Open the diagram sheet
    Quantity PriceDSS+tQ*QtPcPpGovt revenueDWL
    Indirect Tax & Welfare Loss · Open the diagram sheet
  • Asked in 21/O/N/24 (a) 21/O/N/24

Evaluation (AO3)

  • Asked in 21/O/N/24 (a) 21/O/N/24 23/M/J/24
  • Asked in 22/O/N/24 (a) 22/O/N/24
  • Asked in 22/M/J/25 (a)

2.2Price elasticity, income elasticity, and cross elasticity of demand

Chapter 8 notes → · 24 essays set on this section ·

The 24 past-paper questions on this section
  1. 9708/21/O/N/25 (a) With the help of a formula, explain what is meant by price elasticity of demand for a product and consider the importance of time in determining whether demand for the product is likely to be relatively price elastic or relatively price inelastic. [8]
  2. 9708/21/O/N/25 (b) Assess whether knowledge of a product's income elasticity of demand is more important to a firm producing it than knowledge of its cross elasticity of demand. [12]
  3. 9708/22/O/N/25 (b) Assess the view that a business should be more concerned about the income elasticity of demand for its product than its cross elasticity of demand when incomes are falling. [12]
  4. 9708/24/O/N/25 (b) Firms will often try to estimate elasticity values to judge the possible success of decisions to change prices or to introduce new products. Assess the extent to which an understanding of income elasticity of demand (YED) may be more useful than cross elasticity of demand (XED) in increasing the income from sales for a firm. [12]
  5. 9708/24/M/J/25 With the help of a formula, explain the meaning of price elasticity of demand and consider the significance to a firm of having price elastic or price inelastic demand for its product. [8]
  6. 9708/22/O/N/24 (b) Assess whether knowledge of income elasticity of demand or price elasticity of demand for its product is more useful to a business aiming to increase the total expenditure on its product during a period of economic growth. [12]
  7. 9708/23/M/J/24 (b) Assess whether cross elasticity of demand is likely to be more important in determining the demand for electric cars than income elasticity of demand. [12]
  8. 9708/21/M/J/24 (b) Assess the extent to which price elasticity of supply or cross elasticity of demand is most useful to businesses. [12]
  9. 9708/22/F/M/24 (b) Assess whether an estimate of the price elasticity of demand for a product is likely to be more useful to a firm than an estimate of its price elasticity of supply. [12]
  10. 9708/23/O/N/23 (b) Assess whether knowledge and understanding of price elasticity of demand (PED) or cross elasticity of demand (XED) is likely to be more useful to a producer of smartphones. [12]
  11. 9708/21/O/N/23 (b) Assess whether price elasticity of demand (PED) or income elasticity of demand (YED) is likely to be of greater importance to a firm producing cars. [12]
  12. 9708/21/M/J/23 (a) With the help of a formula, explain the meaning of cross elasticity of demand and consider which determinants are most important in establishing the size and sign of its coefficient [8]
  13. 9708/22/O/N/23 (a) With the help of a formula, explain what is meant by the term price elasticity of demand for a product and consider the extent to which it allows an entrepreneur to determine the effect of price changes on the total expenditure on their product. [8]
  14. 9708/23/M/J/23 (b) When the price of a product changes, it usually changes the consumer surplus in the market. Assess how variations in price elasticity of demand for a product determine the extent of changes in consumer surplus in a market. [12]
  15. 9708/23/M/J/23 (a) Explain, with the help of examples, the significance of the size and sign of the coefficient of income elasticity of demand for the classification of a good and consider how confident you are of this classification. [8]
  16. 9708/21/O/N/22 (b) Discuss whether knowledge of price elasticity of demand or income elasticity of demand would be of greater use to a business that produces cars. [12]
  17. 9708/22/M/J/22 (b) Discuss the difficulties that businesses might have when they try to control the factors that determine the price elasticity of demand for a product and consider whether attempts to control these factors are likely to be successful. [12]
  18. 9708/23/O/N/21 (b) Discuss whether cross elasticity of demand or income elasticity of demand is likely to be more useful in assisting a firm in its pricing decisions. [12]
  19. 9708/23/M/J/21 Market research has estimated that the cross-elasticity of demand for hotels in Barbados with respect to the price of flights to Barbados is –2.5, and that the cross-elasticity of demand for flights to Antigua with respect to the price of flights to Barbados is +0.5. (a) Explain what is meant by cross-elasticity of demand and what these values mean in terms of the effect of changes in the price of flights to Barbados on (i) the demand for hotels in Barbados, and (ii) the demand for flights to Antigua. [8]
  20. 9708/22/M/J/21 An economy is experiencing a fall in average incomes during a severe recession. (b) Discuss the extent to which the concepts of income elasticity of demand and price elasticity of demand might be useful to an entrepreneur in this economy and consider which would be more useful. [12]
  21. 9708/21/M/J/21 (b) Discuss the extent to which knowledge of the income elasticity of demand for its product is likely to be more useful to a business than knowledge of the cross elasticity of demand for its product. [12]
  22. 9708/23/O/N/20 (a) Explain what is meant by income elasticity of demand and, with the help of examples, show how it can be used to determine whether a good is normal or inferior. [8]
  23. 9708/21/O/N/20 (b) Explain the implications of price elasticity of demand and income elasticity of demand for business decisions. Discuss which measure is likely to be more useful to a business. [12]
  24. 9708/23/M/J/20 (b) Discuss whether, for a manufacturer of smartphones, knowledge of their product’s price elasticity of demand or its cross elasticity of demand with respect to other products is more useful. [12]

Knowledge and understanding (AO1)

Analysis: the chains (AO2)

Evaluation (AO3)

2.3Price elasticity of supply

Chapter 9 notes → · 13 essays set on this section ·

One essay filed under this section, 21/M/J/24 (a), is about income elasticity of demand rather than supply: the items it needs are in 2.2.

The 13 past-paper questions on this section
  1. 9708/24/O/N/25 (a) Explain what determines elastic and inelastic price elasticity of supply (PES) and consider the extent to which the value of PES may differ between an agricultural good and a manufactured good. [8]
  2. 9708/23/M/J/25 Semi-conductors are widely used in the production of many types of electronic goods such as smartphones. It has been estimated that the price elasticity of supply for semi-conductors is 0.2 in the short run and 0.8 in the long run. (a) Explain what these estimates mean for producers of smartphones that use semi-conductors and consider the significance of the long-run estimate. [8]
  3. 9708/22/M/J/25 (b) Assess the extent to which knowledge of a product’s price elasticity of supply is the most useful measure of elasticity to a firm needing to react quickly to changes in its market. [12]
  4. 9708/21/O/N/24 (b) Assess whether the supply of agricultural products is likely to be more price elastic or less price elastic than the supply of manufactured products. [12]
  5. 9708/21/M/J/24 (a) With the help of a formula, explain what is meant by the income elasticity of demand for a product and consider the extent to which demand for the product will always rise at the same rate as the income of its consumers. [8]
  6. 9708/23/O/N/23 a) The price elasticity of supply (PES) for a new smartphone is estimated to be 0.8 in the short run and 1.8 in the long run. Explain what these estimates mean for producers and consumers of smartphones and consider why the estimates differ. [8]
  7. 9708/22/O/N/23 b) Assess whether the concept of price elasticity of supply or cross elasticity of demand will be more useful to a business wanting to increase its total sales in a growing economy. [12]
  8. 9708/21/M/J/22 a) Explain two factors that determine the price elasticity of supply of a manufactured product. [8]
  9. 9708/22/F/M/22 a) Use examples to explain why the supply of some products is price elastic and the supply of other products is price inelastic. [8]
  10. 9708/21/O/N/21 b) Discuss whether decisions made by a business are more likely to be influenced by knowledge of the price elasticity of demand for its product or by knowledge of the price elasticity of supply of its product. [12]
  11. 9708/23/O/N/20 b) Discuss whether knowledge of price elasticity of demand or price elasticity of supply is more useful for a car manufacturer. [12]
  12. 9708/23/M/J/20 The price elasticity of supply for a new smartphone is estimated at 0.8 in the short run and 1.5 in the long run. a) Explain price elasticity of supply and suggest why the above estimates differ. [8]
  13. 9708/22/M/J/20 In summer 2018, many countries suffered a water shortage because of a long spell of very dry weather. a) Explain whether you would expect the price elasticity of supply of water to be relatively elastic or relatively inelastic. [8]

Knowledge and understanding (AO1)

Analysis: the chains (AO2)

Evaluation (AO3)

  • Asked in 21/O/N/24 (b) 24/O/N/25 (a)
  • Asked in 22/M/J/20 21/O/N/24 (b) 24/O/N/25 (a)
  • Asked in 23/M/J/25 23/O/N/23 (a) 23/M/J/25
  • Asked in 21/M/J/24 (b) 22/F/M/24 (b) 22/M/J/25 (b) 22/O/N/23 (b)
    2 more21/O/N/21 (b) 23/O/N/20 (b)
  • Asked in 22/F/M/24 (b) 21/O/N/21 (b) 23/O/N/20 (b)
  • Asked in 21/M/J/24 (b) 22/M/J/25 (b) 22/O/N/23 (b)

2.4The interaction of demand and supply

Chapter 10 notes → · 11 essays set on this section ·

The 11 past-paper questions on this section
  1. 9708/23/O/N/25 (a) In 2022 the supply of root ginger from Nigeria, Africa's biggest producer, fell by 20%. Market demand was expected to grow by more than 5%. With the help of a demand and supply diagram, explain how the market equilibrium for root ginger in Nigeria is likely to change and consider how certain you are of the new market price. [8]
  2. 9708/22/M/J/25 (a) Explain three reasons, associated with costs of production, why the supply curve for a particular market may shift to the right and consider the extent to which government microeconomic policy may also shift the supply curve for a particular market to the right. [8]
  3. 9708/22/O/N/24 With the help of diagrams(s), explain the difference between a cause of movement along the demand curve and a shift in the demand curve. Consider the impact of a change in demand of one good due to the change in price of another good. [8]
  4. 9708/21/O/N/24 Explain the determinants of supply for an agricultural product, such as rice, and consider which of these determinants is likely to be of the greatest significance at the present time. [8]
  5. 9708/23/M/J/24 From 2030, most new car production in the United Kingdom (UK) will be of electric cars. a) Excluding the price of electric cars, explain the determinants of demand for electric cars and consider which of these determinants is likely to be of greatest significance at the present time. [8]
  6. 9708/22/M/J/23 (a) With the help of a diagram(s), explain what is meant by equilibrium in a market and consider the extent to which the equilibrium price and equilibrium quantity are likely to change for a product following an increase in the wages for labour across the whole economy. [8]
  7. 9708/21/O/N/23 (a) With the help of a diagram, explain what could cause an increase in demand for a product and consider whether the impact of an increase in demand on the price of the product will be the same in the short run and the long run. [8]
  8. 9708/22/F/M/23 a) Explain the functions of price in resource allocation and consider the importance of these functions in relation to the potential effectiveness of a market economy. [8]
  9. 9708/22/F/M/20 a) Explain what determines the change in equilibrium price and equilibrium quantity of a good when there is a rise in incomes in an economy. [8]
  10. 9708/23/O/N/20 a) Using diagrams, explain what might cause a market to be in disequilibrium, and how market forces would lead to equilibrium being restored. [8]
  11. 9708/21/M/J/20 There is increasing concern about the impact of foreign holidays on the environment of the host country. a) Explain, with the aid of a demand and supply diagram, two factors that might cause an increase in the demand for foreign holidays. [8]

Knowledge and understanding (AO1)

Analysis: the chains (AO2)

  • Asked in 23/O/N/20 (a) 23/M/J/25 22/F/M/23 (a)
    Show the diagrams
    Quantity PriceDSPcQsQdShortage
    Shortage (P below Eq) · Open the diagram sheet
    Quantity PriceDSPfQdQsSurplus
    Surplus (P above Eq) · Open the diagram sheet
  • Asked in 23/O/N/20 (a)
    Also asked in · Unit 3 22/F/M/23 (b) 23/O/N/22 (b)
    Show the diagrams
    Quantity PriceDSPcQsQdShortage
    Price Ceiling (Rent Control) · Open the diagram sheet
    Quantity of Labour WageDʟSʟWₘᵢₙQdQsUnemployment
    Price Floor (Min Wage) · Open the diagram sheet
  • Asked in 21/O/N/23 (a) 21/M/J/20 22/F/M/20 (a) 22/M/J/23 (a)
    3 more23/O/N/25 (a) 22/M/J/25 (a) 23/O/N/20 (a)
    Show the diagrams
    Quantity PriceD₁D₂SP₁Q₁P₂Q₂
    Demand Shift Right · Open the diagram sheet
    Quantity PriceD₁D₂SP₁Q₁P₂Q₂
    Demand Shift Left · Open the diagram sheet
    Quantity PriceDS₁S₂P₁Q₁P₂Q₂
    Supply Shift Right · Open the diagram sheet
    Quantity PriceDS₁S₂P₁Q₁P₂Q₂
    Supply Shift Left · Open the diagram sheet
  • Asked in 23/O/N/25 (a)
    Show the diagrams
    Quantity PriceD₁D₂SP₁Q₁P₂Q₂
    Demand Shift Right · Open the diagram sheet
    Quantity PriceDS₁S₂P₁Q₁P₂Q₂
    Supply Shift Left · Open the diagram sheet
  • Asked in 22/F/M/20 (a) 22/M/J/23 (a)
    Show the diagrams
    Quantity PriceD₁D₂SP₁Q₁P₂Q₂
    Demand Shift Right · Open the diagram sheet
    Quantity PriceD₁D₂SP₁Q₁P₂Q₂
    Demand Shift Left · Open the diagram sheet
  • Asked in 22/M/J/23 (a)
    Show the diagram
    Quantity PriceDS₁S₂P₁Q₁P₂Q₂
    Supply Shift Left · Open the diagram sheet
  • Asked in 22/F/M/23 (a) 23/M/J/25
    Also asked in · Unit 1 21/O/N/20 (b) 22/O/N/24 (b)
  • Asked in 23/M/J/25

Evaluation (AO3)

  • Asked in 22/F/M/23 (a) 23/M/J/25
    Also asked in · Unit 1 21/O/N/20 (b) 22/O/N/24 (b)
  • Asked in 23/M/J/25
  • Asked in 23/O/N/25 (a)
  • Asked in 21/O/N/23 (a) 23/M/J/25
  • Asked in 22/M/J/23 (a)

2.5Consumer and producer surplus

Chapter 11 notes → · 3 essays set on this section ·

The 3 past-paper questions on this section
  1. 9708/22/O/N/25 (a) With the help of a diagram, explain the difference between producer surplus and consumer surplus and consider the extent to which producers always gain when the price of a product increases due to higher costs of production. [8]
  2. 9708/22/M/J/23 (a) With the help of a diagram(s), explain what is meant by consumer surplus and producer surplus and consider whether a rise in the price of a product because of higher costs of production is likely to always reduce the consumer surplus. [8]
  3. 9708/21/M/J/21 a) With the aid of diagrams, explain how consumer surplus is affected by a decrease in the price of a luxury product with many substitutes, and of an essential product with few substitutes. [8]

Knowledge and understanding (AO1)

Analysis: the chains (AO2)

  • Asked in 21/M/J/21 (a) 23/M/J/23 (b)
    Show the diagram
    Quantity PriceDSP*Q*CSPS
    Consumer & Producer Surplus · Open the diagram sheet
  • Asked in 22/M/J/23 (a) 22/O/N/25 (a) 23/M/J/23 (b)
    Show the diagram
    Quantity PriceDS₁S₂P₁Q₁P₂Q₂
    Supply Shift Left · Open the diagram sheet
  • Asked in 23/M/J/23 (b) 22/M/J/23 (a) 21/M/J/21 (a)
    Show the diagram
    Quantity PriceInelasticElastic
    PED: Elastic vs Inelastic · Open the diagram sheet
  • Asked in 22/O/N/25 (a)
    Show the diagram
    Quantity PriceDS₁S₂P₁Q₁P₂Q₂
    Supply Shift Left · Open the diagram sheet

Evaluation (AO3)

  • Asked in 22/M/J/23 (a)
  • Asked in 22/O/N/25 (a)
  • Asked in 23/M/J/23 (b) 22/M/J/23 (a)

Evaluation toolkit and exam technique

These work in every section. Most evaluation marks in Unit 2 come from one of these moves applied to the question in front of you, and most 12-mark questions ask you to compare two elasticities.

Evaluation (AO3)

Exam technique

Model chains and evaluation points for each item are being added. Until then, check yourself against the chapter notes and the mark scheme for each question.

This is a free, unofficial Cambridge 9708 Economics revision resource and is not affiliated with Cambridge Assessment International Education.