(a)[2]
Explain what might be the opportunity cost if the Pakistan government agreed to pay subsidies to Pakistan’s farmers comparable to those paid to India’s farmers.
(b)[4]
- With reference to Table 1.1, state in which product group Pakistan’s farmers are most disadvantaged. [1]
- Explain how the lower level of subsidy currently paid to Pakistan’s farmers is likely to affect Pakistan’s trade in agricultural goods when competing with India in international markets. [3]
(c)[4]
Analyse, with the help of a diagram, how the sales tax on fertilisers affects the market for fertilisers in Pakistan.
(d)[4]
Explain two other ways, apart from subsidies and reductions in sales tax, in which the government might support Pakistan’s farmers.
(e)[6]
Discuss whether agricultural subsidies should not be paid to farmers in countries which have lower opportunity costs in other areas of production.