DP Economics

Question 19N.3.HL.TZ0.f.iv

Date	November 2019	Marks available	[Maximum mark: 2]	Reference code	19N.3.HL.TZ0.f.iv
Level	HL	Paper	3	Time zone	TZ0
Command term	Calculate	Question number	f.iv	Adapted from	N/A

f.iv.

[Maximum mark: 2]

19N.3.HL.TZ0.f.iv

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.

The monthly corn surplus created must be purchased by the government of Nissos.

Using Figure 1, calculate the change in consumer expenditure on corn in Nissos.

[2]

Markscheme

8 × 6 = $48 million
10 × 5 = $50 million

Any valid working is sufficient for [1].

Change = $2 million OR an increase of $2 million.

An answer of 2 or 2 million or $2 million without working is sufficient for [1].

OFR applies.

For full marks to be awarded the response must provide valid working and include correct units.