By 2019, India had become the largest producer of sugar in the world. In India, sugar cane is cultivated by many mostly low-income farmers. They sell sugar cane to mills, and those mills turn the sugar cane into sugar. Compared with growing it, processing the sugar cane is more capital-intensive. The Indian government fixes a minimum price for sugar cane and subsidises the export of sugar.
(a)[2]
Define what is meant by a minimum price.
(b)[4]
Explain two advantages of capital-intensive production.
(c)[6]
Analyse why farmers on low incomes are likely to have low living standards.
(d)[8]
Discuss whether or not a government subsidy on the export of sugar will help it achieve its macroeconomic aims.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A minimum price is a government-set price that is above the equilibrium price” …