A-LevelEconomicsGovernment microeconomic intervention9708/12 · Oct/Nov 2013 · Q111 Mark
The diagram shows the market for sugar which is in equilibrium at a price of OP. [Figure 11.1] A government then fixes a maximum price of OP₁. What will happen as a result?
This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.
Aan increase in consumer surplus equal to PRUP₁
Breduction in expenditure by people who still buy sugar equal to PQSP₁
Creduction in farmers' receipts equal to QRML
Dfarmers' receipts would be PQLO
✓ Correct answer
B: reduction in expenditure by people who still buy sugar equal to PQSP₁
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