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1.3 Price determination in a competitive market

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Question 6

In the diagrams below, S1 S_1\,S1​ and D1 D_1\,D1​ represent the original market supply and demand curves for Organic Oats, while S2 S_2\,S2​ and D2 D_2\,D2​ represent the curves after a market shock.

Four supply and demand shift diagrams

Which diagram, A, B, C or D, illustrates the simultaneous effects of a significant fall in the market price of rye flakes (a close substitute for organic oats) alongside the introduction of a new government subsidy paid directly to organic oat farmers?

Diagram A

Diagram B

Diagram C

Diagram D

1.3 Price determination in a competitive market Questions

  1. A Level
  2. /Economics
  3. /1.3 Price determination in a competitive market