A-LevelEconomicsGovernment Intervention in MarketsOct/Nov 2020Paper 1 Q181 Mark
The market for good X is in equilibrium. The government introduces a subsidy to the producers of good X. Under which conditions will the total expenditure by the government on the subsidy be the greatest?
Aprice elasticity of demand for good X <1, price elasticity of supply for good X <1
Bprice elasticity of demand for good X <1, price elasticity of supply for good X >1
Cprice elasticity of demand for good X >1, price elasticity of supply for good X <1
Dprice elasticity of demand for good X >1, price elasticity of supply for good X >1
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The correct answer is D. This question tests the candidate's understanding of government intervention in markets within the Economicssyllabus. The examiner's mark scheme requires...
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Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
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