Sample 1

IB Economics: Sample 1

Answer all the questions. Answers must be written within the answer boxes provided.Country B subsidises cotton producers by paying them $0.40c per kg to for each kg of cotton they produce. The effect of this subsidy is shown in the diagram with the supply curve for cotton shifting from S to S1. Using the data in the diagram calculate the following:a. (i) Calculate the value of the subsidy paid by the government. [2]

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