Question 19M.3.HL.TZ0.1e
| Date | May 2019 | Marks available | [Maximum mark: 2] | Reference code | 19M.3.HL.TZ0.1e |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate | Question number | e | Adapted from | N/A |
Note that widgets are an imaginary product.
In Country X, the supply and demand for widgets are given by the functions
Qs = − 45 + 4.5P
Qd = 180 − 3P
where P is the price per widget in dollars ($), Qs is the quantity of widgets supplied (thousands per year) and Qd is the quantity of widgets demanded (thousands per year).
The supply (S) and demand (D) functions are represented in Figure 1.
An increase in costs of production has resulted in a new supply function:
Qs1 = − 60 + 3P
Calculate the change in producer surplus resulting from the increase in costs of production.
[2]
(0.5 × 20 × 60 000) − (0.5 × 20 × 90 000)
Any valid working is sufficient for [1].
= −$300 000 (or a decrease of $300 000)
An answer of −$300 000 or −300 000 without any working is sufficient for [1].
Although calculation of “300” was performed successfully by many, omission of “000”, “$” or reference to “a decrease” was extremely common. Several responses calculated the initial PS as 800 or 1350.
