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100+ Free SACE Stage 2 Economics Practice Questions
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The SACE Stage 2 Economics external assessment accounts for 30% of the overall subject grade. Our 100-question practice bank provides structured study support for senior secondary students in South Australia.
Sample SACE Stage 2 Economics Practice Questions
Try these sample questions to test your SACE Stage 2 Economics exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1Which of the following scenarios will cause a rightward shift of the market demand curve for coffee, rather than a movement along the demand curve?
A.A decrease in the market price of coffee beans.
B.An increase in consumer disposable income, assuming coffee is a normal good.
C.An increase in the cost of labor used in coffee shops.
D.An improvement in coffee harvesting technology.
Explanation: A rightward shift in the demand curve is caused by non-price determinants of demand, such as an increase in consumer disposable income for a normal good. Changes in the product's own price cause movements along the existing demand curve, while changes in production costs or technology shift the supply curve.
2If the price of a solar panel system decreases by 10% and the quantity demanded increases by 25%, what is the Price Elasticity of Demand (PED) and how is demand classified?
A.PED = -0.4; demand is inelastic.
B.PED = -2.5; demand is elastic.
C.PED = -1.5; demand is unit elastic.
D.PED = -25.0; demand is perfectly elastic.
Explanation: Price Elasticity of Demand is calculated as percentage change in quantity demanded divided by percentage change in price: %ΔQd / %ΔP = (+25%) / (-10%) = -2.5. Because the absolute value (| -2.5 | = 2.5) is greater than 1, demand is price elastic.
3A boutique bakery increases the price of its artisanal sourdough bread by 15%, resulting in a 5% decrease in total sales revenue. What does this reveal about the price elasticity of demand for this bread?
A.Demand is price inelastic, as price and total revenue move in the same direction.
B.Demand is price elastic, because the percentage drop in quantity demanded exceeded the percentage increase in price.
C.Demand is perfectly inelastic, as revenue changed independently of quantity.
D.Demand is unit elastic, because revenue and price changed proportionally.
Explanation: When price increases and total revenue decreases, demand must be price elastic (|PED| > 1). The percentage decrease in quantity demanded outweighs the percentage increase in price, causing overall revenue (P × Q) to fall.
4An economic study finds that when average household income rises by 8%, the demand for instant noodles drops by 12%. What is the Income Elasticity of Demand (YED) and what type of good is instant noodles?
A.YED = +1.5; instant noodles are a luxury good.
B.YED = -1.5; instant noodles are an inferior good.
C.YED = +0.67; instant noodles are a necessity good.
D.YED = -0.67; instant noodles are a complement good.
Explanation: Income Elasticity of Demand (YED) = %ΔQd / %ΔIncome = (-12%) / (+8%) = -1.5. A negative YED indicates that demand falls as consumer income rises, which defines an inferior good.
5When the price of lithium-ion batteries decreases by 20%, the quantity demanded for electric vehicles increases by 30%. What is the Cross-Price Elasticity of Demand (XED) and what is the economic relationship between these goods?
A.XED = -1.5; electric vehicles and lithium-ion batteries are complementary goods.
B.XED = +1.5; electric vehicles and lithium-ion batteries are substitute goods.
C.XED = -0.67; electric vehicles and lithium-ion batteries are independent goods.
D.XED = +0.67; electric vehicles and lithium-ion batteries are inferior goods.
Explanation: Cross-Price Elasticity of Demand (XED) = %ΔQd of EV / %ΔP of batteries = (+30%) / (-20%) = -1.5. A negative XED indicates that the two goods are complements, meaning a price drop in one increases demand for the other.
6A producer of wheat increases output from 500 metric tonnes to 650 metric tonnes following a price increase from $200 per tonne to $240 per tonne. What is the Price Elasticity of Supply (PES)?
A.PES = 0.67
B.PES = 1.25
C.PES = 1.50
D.PES = 2.00
Explanation: Percentage change in quantity supplied = (650 - 500) / 500 = 150 / 500 = +30%. Percentage change in price = (240 - 200) / 200 = 40 / 200 = +20%. PES = %ΔQs / %ΔP = 30% / 20% = 1.50.
7The market demand for a product is given by QD = 120 - 4P, and market supply is given by QS = 20 + 6P. What are the equilibrium price (P*) and equilibrium quantity (Q*)?
A.P* = $10; Q* = 80 units
B.P* = $12; Q* = 72 units
C.P* = $14; Q* = 64 units
D.P* = $15; Q* = 60 units
Explanation: Set QD = QS: 120 - 4P = 20 + 6P. Adding 4P to both sides gives 120 = 20 + 10P. Subtracting 20 gives 100 = 10P, so P* = $10. Substitute P* into QD: Q* = 120 - 4(10) = 80 units.
8Suppose a competitive market has a linear demand curve starting at a maximum willingness-to-pay of $50 and an equilibrium price of $20. If the equilibrium quantity sold is 600 units, what is the Consumer Surplus?
A.$6,000
B.$9,000
C.$12,000
D.$18,000
Explanation: Consumer Surplus is the area of the triangle under the demand curve above the equilibrium price: CS = 0.5 × Base × Height = 0.5 × 600 × ($50 - $20) = 0.5 × 600 × $30 = $9,000.
9The equilibrium rental price for apartments in a metropolitan area is $400 per week. If the government imposes a binding price ceiling of $300 per week, where QD = 5,000 and QS = 3,000 at $300, what market condition is created?
A.A market surplus of 2,000 apartments.
B.A market shortage of 2,000 apartments.
C.A market equilibrium at 4,000 apartments.
D.An increase in housing supply of 2,000 apartments.
Explanation: A binding price ceiling set below the equilibrium price causes quantity demanded (5,000) to exceed quantity supplied (3,000), creating a market shortage equal to QD - QS = 5,000 - 3,000 = 2,000 apartments.
10What is the economic outcome when the government establishes a price floor above the market equilibrium price for an agricultural commodity?
A.Quantity demanded will exceed quantity supplied, creating a shortage.
B.Quantity supplied will exceed quantity demanded, creating a surplus.
C.Market price will fall until quantity demanded equals quantity supplied.
D.Consumer surplus will expand while producer surplus contracts.
Explanation: A price floor set above the market equilibrium price incentivizes suppliers to produce more while consumers reduce their purchases, resulting in an excess supply or surplus.
About the SACE Stage 2 Economics Practice Questions
Verified exam format metadata for SACE Stage 2 Economics External Assessment is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.