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Question 18N.3.HL.TZ0.c

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Date November 2018 Marks available [Maximum mark: 4] Reference code 18N.3.HL.TZ0.c
Level HL Paper 3 Time zone TZ0
Command term Explain Question number c Adapted from N/A
c.
[Maximum mark: 4]
18N.3.HL.TZ0.c

Figure 3 illustrates the market for cotton in the country of San Marcus, a small closed economy. Cotton is used as an input in the San Marcus textile industry. Quantity is in thousands of kilograms (kg).

The Government of San Marcus decides to provide a subsidy equal to $8 per kilogram to its producers of cotton.

Explain two reasons why the government of San Marcus may have decided to grant a subsidy to its cotton producers.

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