O-LevelEconomicsThe allocation of resources2281/11 · Oct/Nov 2010 · Q61 Mark

The diagram shows demand and supply curves for a product at its equilibrium price P. [Figure 6.1] How would the introduction of a subsidy be shown?

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ADemand would shift to D1.

BDemand would shift to D2.

CSupply would shift to S₁.

DSupply would shift to S2.

✓ Correct answer

D: Supply would shift to S2.

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, Oct/Nov 2010 Paper 1 Variant 1, question 6.

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