A-LevelEconomicsGovernment Intervention in MarketsFeb/Mar 2021Paper 1 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?
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
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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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