O-LevelEconomicsThe allocation of resources2281/11 · Oct/Nov 2011 · Q71 Mark

Wet weather in 2009 led to a fall in the sales of summer clothes. To support businesses the government reduced the sales tax (VAT). How would these events be shown on a demand and supply diagram for summer clothes?

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Ademand curve: move to the left; supply curve: move to the right

Bdemand curve: move to the left; supply curve: no change

Cdemand curve: move to the right; supply curve: move to the left

Ddemand curve: no change; supply curve: move to the right

✓ Correct answer

A: demand curve: move to the left; supply curve: move to the right

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, Oct/Nov 2011 Paper 1 Variant 1, question 7.

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