A-LevelEconomicsInternational economic issues9708/12 · Feb/Mar 2025 · Q301 Mark
The diagram shows the impact of a government introducing an export subsidy for its domestic producers of oil. [Figure showing domestic supply, domestic supply + export subsidy, world supply, and domestic demand curves, with prices 70, 50, 42 and quantities 0, 20, 35, 45, 50, 60] What will be the effect of this export subsidy on the operation of the domestic market?
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Adomestic output of oil will increase by 15 million units
Bimports of oil will decrease by 25 million units
Cthe domestic price of oil will decrease by $28
Dthe domestic price of oil will increase by $8
✓ Correct answer
B: imports of oil will decrease by 25 million units
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