DP Economics

Question 19N.3.HL.TZ0.1e.i

Date	November 2019	Marks available	[Maximum mark: 4]	Reference code	19N.3.HL.TZ0.1e.i
Level	HL	Paper	3	Time zone	TZ0
Command term	Explain	Question number	e.i	Adapted from	N/A

e.i.

[Maximum mark: 4]

19N.3.HL.TZ0.1e.i

The market for corn on the island of Nissos is perfectly competitive. The demand and supply for corn in Nissos are given by the functions

$Q d = 10 - 0.5 P$

$Q s = - 2 + P$

where $Q d$ is the quantity of corn demanded per month in millions of kilograms (kg), $Q s$ is the quantity of corn supplied per month in millions of kg and $P$ is the price per kg of corn in dollars ($).

Advisors to the government of Nissos suggest setting a price floor.

(e.i)

Explain one possible advantage and one possible disadvantage of governments setting a price floor in agricultural markets.

[4]

Markscheme

For providing a limited explanation of one advantage or one disadvantage, award a maximum of [1].

For an accurate explanation of one advantage or one disadvantage or a limited explanation of both, award a maximum of [2].

For providing an accurate explanation of one advantage or one disadvantage and a limited explanation of one disadvantage or one advantage, award a maximum of [3].

For providing two accurate explanations, award a maximum of [4].

Syllabus sections

Last exams 2021 » Section 1: Microeconomics

Last exams 2021 » Section 1: Microeconomics » 1.3 Government intervention » Price controls » Price floors (minimum prices): rationale, consequences and examples

Last exams 2021 » Section 1: Microeconomics » 1.3 Government intervention » Price controls

Last exams 2021 » Section 1: Microeconomics » 1.3 Government intervention

Question 19N.3.HL.TZ0.1e.i

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