Economics 9708 · AS & A Level · Cross elasticity of demand

Cross elasticity of demand — practice question

The diagram illustrates the impact on the market for rice of a change in government policy which shifts the supply curve from S1 to S2. What does the area JKLM represent?

  • Athe cost to the government of a subsidy to rice growers
  • Bthe extra saving to importers of the removal of a tariff on rice
  • Cthe increase in consumer surplus from the introduction of a maximum price for rice
  • Dthe loss in government revenue from the reduction in a lump sum tax on rice

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