Economics (AS & A Level) · Feb / March 2025 · Paper 12 · Question 13

To help achieve price stability, the government in country F operates a buffer stock scheme, with a minimum price of P1 and a maximum price of P2. The current demand and supply in the market is shown. [diagram: price-quantity graph with demand curve D and supply curve S, price levels P2 and P1, points G, H, and quantities L, K, J] What should the government do to ensure the scheme is effective?

1. Abuy an amount equal to GH
2. Bbuy an amount equal to KJ
3. Cbuy an amount equal to LJ
4. Ddo nothing as the equilibrium price is below P1

As printed in the paper