Economics 9708 · AS & A Level · Maximum and minimum prices

Maximum and minimum prices — practice question

In the diagram, D shows the demand curve for an agricultural commodity and S shows the original supply curve. The government undertakes to keep farmers’ incomes at no less than this starting level. The harvests in four later years are represented by the supply curves S1–S4. What total amount will the government have to pay to subsidise farmers across the four later years?

  • A$0
  • B$3000
  • C$6000
  • D$10 000

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