(a)[6]
(i) Calculate the percentage change in the price of cereals between 2011 and January 2014. (ii) Explain two possible reasons why the world price of cereals and the world price of dairy products moved in opposite directions between 2012 and January 2014.
- Calculate the percentage change in cereal prices between 2011 and January 2014. [2]
- Explain two possible reasons why the world price of cereals and the world price of dairy products moved in opposite directions between 2012 and January 2014. [4]
(b)[3]
Explain how an economist would decide whether cereals and dairy products are substitutes.
(c)[3]
Use a diagram to show how a subsidy will affect the price and quantity of rice produced in India.
(d)[2]
Explain a likely opportunity cost of the Indian Government’s spending on the food subsidy.
(e)[6]
Discuss whether food subsidies are likely to solve the world's food shortages over the long term.