SACE Economics Practice Questions
The 64 practice questions inside the SACE Economics Mastery Pack, grouped by area of study. Every question comes with a full worked solution.
- Economic inquiry skills
- Multiple choice × 3
- Data analysis
- Multiple choice × 5
- Explain × 1
- Microeconomics
- Multiple choice × 25
- Complete the diagram and explain × 1
- Interpret × 1
- Justify × 2
- Assess × 1
- Explain × 1
- Compare and contrast × 1
- Complete the diagram × 1
- Evaluate × 1
- Macroeconomics
- Multiple choice × 15
- Outline × 1
- Justify × 1
- Assess × 1
- Illustrate × 1
- Evaluate × 1
- Analyse × 1
Refer to the following information.
Most of the fictional Country A's fresh mangoes are grown in one northern district. In January a cyclone strips fruit from about a third of the district's trees just before harvest. Mango ice-cream makers in the south buy fresh mangoes as a key input.
You are given a demand and supply diagram for the fresh mango market. The vertical axis is Price ($ per tray) and the horizontal axis is Quantity (trays per week). A downward-sloping demand curve (D) and an upward-sloping supply curve (S) intersect at the original equilibrium price Pe and quantity Qe.
(a) Describe how you would complete the diagram to show the effect of the cyclone on the fresh mango market. Name every curve and point you would add and how you would label it. (2 marks)
(b) Explain the effect of the cyclone on the equilibrium price and quantity of fresh mangoes. (2 marks)
Show the worked answer
Answer: Worked solution
(a) Draw a new supply curve to the left of S and label it S1. D does not move. Mark the new intersection of D and S1 and draw dotted lines from it to both axes. Label the new, higher price Pe1 on the vertical axis and the new, lower quantity Qe1 on the horizontal axis. Pe and Qe stay on the diagram so the change can be seen.
(b) The cyclone is a non-price determinant of supply. Destroying about a third of the crop means growers can offer fewer trays at every price, so supply decreases (S shifts left to S1). At the original price Pe, quantity demanded now exceeds quantity supplied, so there is excess demand. Buyers such as the southern ice-cream makers compete for the limited fruit and bid the price up. As the price rises, quantity demanded contracts along D and quantity supplied extends along S1 until the market clears at the higher price Pe1 and the lower quantity Qe1. Ice-cream makers now pay more for a key input, which will also reduce the supply of mango ice-cream.
Mark allocation (4 marks)
- (a) 1 mark: supply shifts left and is labelled S1, with D unchanged.
- (a) 1 mark: new equilibrium correctly labelled Pe1 (higher) and Qe1 (lower). An unlabelled or partly labelled diagram cannot earn this mark.
- (b) 1 mark: explains that the cyclone reduces the quantity supplied at every price, a shift in supply rather than a movement along it.
- (b) 1 mark: explains the price mechanism, with excess demand at Pe leading to a price rise, a contraction in quantity demanded and an extension along S1 to the new equilibrium.
20 full-length practice exams with worked solutions, 20 revision notes, 64 practice questions and 200 flashcards.
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