A-LevelEconomicsGovernment microeconomic intervention9708/12 · May/June 2016 · Q171 Mark
In the diagram, DD is the demand curve for an agricultural commodity, S₁ is the supply curve in period 1 and S2 is the supply curve in period 2. The broken curve is a rectangular hyperbola. [Figure X.X] The government operates a buffer stock scheme fixing the price at OP₁ in period 1 and OP2 in period 2. How do output and farm revenue in period 2 compare with period 1?
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.
Ahigher, same
Bhigher, higher
Clower, higher
Dlower, same
✓ Correct answer
A: higher, same
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