Question 19M.3.HL.TZ0.d
| Date | May 2019 | Marks available | [Maximum mark: 2] | Reference code | 19M.3.HL.TZ0.d |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate | Question number | d | Adapted from | N/A |
Country X and Country Y are capable of producing both apples and bananas. Assume a two-country, two-product model.
Country Y has absolute advantage in the production of both apples and bananas, and comparative advantage in the production of bananas.
The market for oranges in Country Z is illustrated on Figure 5.
Figure 5
The domestic demand and supply for oranges are given by the functions
Qd = 300 − 100P
Qs = − 60 + 60P
where P is the price of oranges in dollars per kilogram ($ per kg), Qd is the quantity of oranges demanded (thousands of kg per month) and Qs is the quantity of oranges supplied (thousands of kg per month). The world price of oranges is $2 per kg.
Due to increased awareness of the possible health benefits of vitamin C, the demand for oranges in Country Z increases by 60 000 per month at each price.
Calculate the change in expenditure on imported oranges as a result of the increase in demand.
[2]
100 000 × 2 − 40 000 × 2
Any valid working is sufficient for [1].
NB Workings which measure market demand, rather than the demand for imports (so the calculation is 160 000 × 2 − 100 000 × 2 are not valid.
= $120 000
An answer of $120 000 or 120 000 without any working or with invalid working as exemplified above is sufficient for [1].
Most responses provided the correct answer of $120 000, although some focused on the total demand rather than the demand for imported oranges, so were awarded 1 mark only owing to invalid working.
