A-LevelEconomicsGovernment microeconomic intervention9708/12 · Feb/Mar 2021 · Q61 Mark
The diagram shows the market for sugar which is initially in equilibrium at a price of OP. [diagram] 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.
Areduction in farmers' revenue equal to PRSP1
Bexpenditure on sugar will be equal to PRMO
Cfarmers' revenue would be P₁UNO
Dproducer surplus will be P1SP2
✓ Correct answer
D: producer surplus will be P1SP2
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