A-LevelEconomicsGovernment Microeconomic InterventionMay/June 2011Paper 1 Q141 Mark
The consumption of a good generates external benefits. Its market equilibrium is E. Which diagram shows the change in the equilibrium (E to E₁) necessary to reflect the correct value of the good to society?
ADiagram showing demand curve shifting right (D to D1), leading to a new equilibrium E1 at a higher price and quantity on the original supply curve.
BDiagram showing supply curve shifting left (S to S1), leading to a new equilibrium E1 at a higher price and lower quantity on the original demand curve.
CDiagram showing supply curve shifting right (S to S1), leading to a new equilibrium E1 at a lower price and higher quantity on the original demand curve.
DDiagram showing demand curve shifting left (D to D1), leading to a new equilibrium E1 at a lower price and quantity on the original supply curve.
✓ Correct Answer
The correct answer is A. This question tests the candidate's understanding of government microeconomic intervention 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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