Econograms · IB Economics
Multiple-choice questions
Choose diagram practice or a mixed practice session. Check your understanding of a model and use question-specific feedback to work through a misconception.
Practise the reasoning, then check the answer
Diagram practice keeps you on one model. Mixed practice brings questions from different topics together. These multiple-choice questions are knowledge checks to support your IB Economics study; they are not an IB Economics exam-paper format.
Try an original sample · Price ceilings
What happens when the maximum price is below equilibrium?
A competitive market has an equilibrium price of $6. The government enforces a maximum price of $4. At $4, consumers want to buy 80 units per week and firms are willing to supply 40 units per week. Demand and supply curves remain unchanged. Which outcome follows?
Reveal the answer and reasoning
B: a shortage of 40 units per week. The maximum price is binding because $4 is below the $6 equilibrium price. At $4, quantity demanded exceeds quantity supplied: 80 − 40 = 40. The legal limit prevents price from rising to clear the market.
- A reverses the relationship: a surplus requires quantity supplied to exceed quantity demanded.
- C counts all demand: 40 of the 80 units wanted can be supplied; the shortage is the unmet 40.
- D ignores the legal limit: an enforced maximum of $4 prevents a legal market price of $6.
The lower price increases quantity demanded and decreases quantity supplied along the existing curves. Neither curve shifts. In the simple model, with no informal market or other source of supply, legal trade is limited to the 40 units available.
After a wrong answer, identify the specific relationship you missed. Then explain the correct answer in a sentence before moving on. For this example: “The binding price ceiling creates excess demand because quantity demanded is greater than quantity supplied.”
Explore the price-ceiling diagram · Move on to written IB-style questions