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Question 18N.3.HL.TZ0.e.i

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Date November 2018 Marks available [Maximum mark: 1] Reference code 18N.3.HL.TZ0.e.i
Level HL Paper 3 Time zone TZ0
Command term Label, Plot Question number e.i Adapted from N/A
e.i.
[Maximum mark: 1]
18N.3.HL.TZ0.e.i

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.

San Marcus now joins the World Trade Organization (WTO) and agrees to slowly liberalize trade, becoming an open economy.

The world price for cotton is $2 per kg. The WTO permits the government of San Marcus to maintain the $8 subsidy.

Plot and label the world cotton supply curve that San Marcus now faces on Figure 3.

 

[1]

Markscheme

Award [1] for an accurate and labelled world cotton supply curve.

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