A-LevelEconomicsThe price system and the microeconomy9708/12 · May/June 2015 · Q91 Mark
The diagram shows the effect on the market for rice of a change in government policy that causes a shift in the supply curve from S to S₁. [Figure 9.1] What does the area JKLM represent?
This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.
Athe cost to the government of a subsidy to rice growers
Bthe extra saving to importers of the removal of a tariff on rice
Cthe increase in consumer surplus from the introduction of a maximum price for rice
Dthe loss in government revenue from the reduction in a lump sum tax on rice
✓ Correct answer
A: the cost to the government of a subsidy to rice growers
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