A-LevelEconomicsGovernment Intervention in MarketsFeb/Mar 2021Paper 1 Q121 Mark
The market for wheat is in equilibrium at price P with supply at 40 million tonnes. Due to a drought in the growing season, supply falls to 20 million tonnes. [diagram] Which immediate action should be taken to maintain the equilibrium price of P?
Agrant a subsidy to farmers equivalent to PP1
Bimpose an indirect tax equivalent to PP2
Cplant more wheat to increase supplies to 40 million tonnes
Duse existing stocks of wheat to increase supplies by 20 million tonnes
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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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