GCSE Economics Revision: Market equilibrium (With Mock Questions!)
👋 Hello, Economics Superstars!
It's time to dive into an important topic for your GCSE Economics exam—Market Equilibrium. Don’t worry, I’m here to guide you through it in a way that’ll help it stick in your memory (and make it a bit more fun 😄). Grab your notes, stay focused, and let’s nail this topic together!
What is Market Equilibrium?
Market equilibrium occurs when the quantity demanded by consumers is equal to the quantity supplied by producers. Simply put, it's the point where supply meets demand and everyone is happy! When the market is in equilibrium, there’s no pressure for prices to change because everything balances out. But, if something tips the scale (like changes in supply or demand), the equilibrium shifts, causing prices to either rise or fall.
Key Learning Points
✨ Market Demand and Supply: These two forces determine the market price. When they’re balanced, we’ve reached equilibrium.
✨ Equilibrium Price: This is the price at which the quantity demanded equals the quantity supplied. It’s often called the "market-clearing" price.
✨ Surplus and Shortage: A surplus occurs when there’s too much supply and not enough demand, causing prices to fall. A shortage happens when there’s not enough supply to meet demand, causing prices to rise.
✨ Shifts in Demand and Supply: Changes in factors like consumer preferences, income, and production costs can shift the curves, leading to new equilibrium points.
What You Need to Show in Your Exam
To smash the exam, you need to:
💡 Understand how supply and demand curves interact to find the equilibrium point.
💡 Be able to draw and label graphs showing shifts in supply and demand.
💡 Explain what happens when there’s a surplus or shortage and how prices adjust to restore equilibrium.
💡 Recognize the impact of external factors like taxes or subsidies on market equilibrium.
Key Things to Remember Before the Exam
🔥 Practice your graphs: Don’t just memorize them—get used to drawing and labeling shifts in both demand and supply curves. The examiner wants to see that you know how to interpret these movements.
🔥 Know your terms: Make sure you're confident with words like "equilibrium," "shortage," "surplus," "demand," and "supply." These will come up again and again.
🔥 Real-life examples: Try to think of examples from the news or everyday life that illustrate how prices change when supply and demand shift. This will make the concepts more concrete in your mind.
🔥 Stay calm! You’ve got this. Market equilibrium is all about balance, and so is exam prep. Keep your cool, and you’ll be able to focus better.
Mock Questions to Test Your Knowledge
Here’s a chance to test what you’ve learned. Try these questions out and see how you do!
Q1 - What happens when the quantity demanded exceeds the quantity supplied at a certain price?
a) There is a surplus
b) The market is in equilibrium
c) There is a shortage
d) The price will fall
Q2 - If the price of a product is above the equilibrium price, what will happen in the market?
a) Shortage of the product
b) Surplus of the product
c) The price will rise
d) Demand will increase
Q3 - Which of the following would likely cause a shift in the demand curve to the right?
a) An increase in the price of the product
b) A fall in the population
c) A rise in consumer income
d) An increase in production costs
Q4 - What is the equilibrium price?
a) The price at which the quantity demanded equals the quantity supplied
b) The lowest price that a seller can charge
c) The highest price that consumers are willing to pay
d) The price at which a shortage occurs
Q5 - If a government subsidy is provided to producers, what is the likely impact on the supply curve?
a) The supply curve shifts to the left
b) The supply curve remains unchanged
c) The supply curve shifts to the right
d) The demand curve shifts to the right
To check your answers and see more questions check out our GCSE Economics Multiple-Choice booklet, with 250 sample questions and answers for you to revise
That’s all for now! Keep practicing, stay positive, and remember: you’re capable of great things! ✨