A-LevelEconomicsGovernment microeconomic intervention9708/12 · Oct/Nov 2012 · Q181 Mark

The diagram shows the market supply and demand curves for an agricultural product. The government guarantees producers a minimum price of OX for their output, but allows the market price to be freely determined by demand and supply. [Diagram] Which area in the diagram represents the total subsidy payments made by the government to producers?

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AUYTS

BUYZW

CXUWV

DXYZV

✓ Correct answer

D: XYZV

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Topic: Government microeconomic intervention, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Oct/Nov 2012 Paper 1 Variant 2, question 18.

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