Economics (AS & A Level) · Oct / Nov 2021 · Paper 13 · Question 12

The table shows the market demand and market supply for kiwifruit over a year. At a market price of $3 per kg there is disequilibrium in the market. [table: price of kiwifruit ($ per kg) | total market demand (thousand tonnes) | total market supply (thousand tonnes); 1 | 220 | 120; 2 | 190 | 130; 3 | 160 | 140; 4 | 130 | 150; 5 | 100 | 160] Which action would the government have to take to achieve market equilibrium at a price of $3 per kg?

1. Aimpose an indirect tax of $2 per kg on kiwifruit
2. Bpurchase the entire supply at $3 per kg and sell at $2 per kg
3. Cset a maximum price of $3 per kg
4. Dsubsidise kiwifruit production by $2 per kg

As printed in the paper