Economics (AS & A Level) · Oct / Nov 2022 · Paper 11 · Question 16
9708Methods and effects of government intervention in markets
The government has decided to guarantee manufacturers a price OP_a for a product and to provide a subsidy to ensure that the market clears. In the diagram, Q_eP_e was the original equilibrium before the policy changes. Which area represents the total cost to the government of this subsidy?
- AP_aUZP_b
- BP_aWYP_b
- CP_eXYP_b
- DVWYZ
As printed in the paper
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Correct answer: B. P_aWYP_b
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