In May $2017$, olive oil prices increased by over $10\%$. This happened because a drought affected Greece, Italy, Spain and Tunisia, which are the main producing countries. World supply was predicted to drop by $14\%$ in $2017$. Demand for olive oil decreased in Europe, but it rose in several other countries, including Australia, Brazil and China. In some countries, certain staple foods, such as bread and rice, are taxed, while in other countries they are subsidised.
(a)[2]
Identify two examples of land used for the cultivation of agricultural crops.
(b)[4]
Explain why the idea of price elasticity of supply (PES) may be useful to a government when deciding whether to subsidise the production of a product.
(c)[6]
Analyse why demand for a product may be greater in one country than in another country.
(d)[8]
Discuss whether the government ought to influence the output of basic food items, such as bread or rice.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “the soil” …