A-LevelEconomicsGovernment Intervention in the MarketFeb/Mar 2017Paper 1 Q141 Mark
In 2014 some supermarkets reduced the price they were willing to pay farmers for milk to below what was then the market equilibrium price. They passed the lower price onto the consumers in order to try and encourage them into the store. The government then fixed an effective minimum price which the supermarkets had to pay the farmers. These two actions are shown in the diagram. [Diagram] What would be the outcome after the supermarket action and then the government action?
Ashortage of 5000 litres a surplus of 4000 litres
Bshortage of 5000 litres a surplus of 7000 litres
Cshortage of 13000 litres a surplus of 4000 litres
Dshortage of 13000 litres a surplus of 7000 litres
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The correct answer is D. This question tests the candidate's understanding of government intervention in the market within the Economicssyllabus. The examiner's mark scheme requires...
📋 Examiner Report & Trap Analysis
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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