Question 21N.1.SL.TZ0.a
| Date | November 2021 | Marks available | [Maximum mark: 10] | Reference code | 21N.1.SL.TZ0.a |
| Level | SL | Paper | 1 | Time zone | TZ0 |
| Command term | Explain | Question number | a | Adapted from | N/A |
Explain the impact on consumers, producers and the government of a price floor being introduced in an agricultural market.
[10]
Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.
Answers may include:
- definition of price floor
- diagram to show the impact of a price floor on an agricultural market
- explanation of how a price floor leads to a higher price and lower quantity demanded from consumers, and a higher price to producers increases quantity supplied because it increases revenues and an opportunity cost to governments because of the expense of buying surplus production
- examples of agricultural markets.
A maximum of [6] should be awarded if a candidate has only considered one stakeholder. A maximum of [8] should be awarded if a candidate has only considered two stakeholders. All three stakeholders are needed to reach level 4.
This question was generally well answered by students with a clear explanation of how producers gain from a minimum price and consumers and the government lose out. The best answers used clear, accurate diagrams, showing changes in consumer and producer surpluses. Effective answers also showed the cost to governments of intervention buying and surplus stock management. The very best answer used effective real-world examples such as intervention buying in agricultural markets.
