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Economics · May / June 2025 · Paper 11 · Question 6

2281Mixed economic system

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

  1. ADemand would shift to D₁.
  2. BDemand would shift to D₂.
  3. CSupply would shift to S₁.
  4. DSupply would shift to S₂.

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Correct answer: D. Supply would shift to S₂.

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