A-LevelEconomicsThe price system and the microeconomy9708/12 · May/June 2018 · Q151 Mark
The diagram shows the effect on the supply curve of a product when the government provides a subsidy. [Figure showing two upward sloping supply curves S1 and S2. S1 is above S2. The vertical distance between S1 and S2 is constant ($5) as quantity increases.] What can be concluded about the nature of the subsidy as the quantity supplied increases?
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.
AIt is a falling percentage (%) of the price of each unit.
BIt is a fixed percentage (%) of the price of each unit.
CIt is a fixed sum on each unit.
DIt is a rising percentage (%) of the price of each unit.
✓ Correct answer
B: It is a fixed percentage (%) of the price of each unit.
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