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Supply · Paper 1 — Free Economics HL Practice Questions
1FoundationSAQ-SFactors affecting supply6 marksPaper 1~9 min
A farmer in Country X adopts a new automated irrigation system that reduces water usage by and permanently lowers production costs. The government also introduces a subsidy on fertilizers, reducing their price by .
(a)
Define the term supply. [2 marks]
(b)
Explain how each of the two changes — the irrigation system and the fertilizer subsidy — affects the farmer's supply of crops. [2 marks]
(c)
Evaluate whether the increase in supply resulting from the fertilizer subsidy is likely to be sustained in the long run. [2 marks]
Solutions
2MasterySAQ-SFactors affecting supply6 marksPaper 1~9 min
Coffee beans are a key input in the production of roasted coffee. In 2024, a severe drought in Brazil destroyed a significant portion of the coffee bean harvest. At the same time, a new automated roasting technology was introduced that reduces the energy costs of coffee roasting by .
(a)
Explain how the drought in Brazil causes a change in the supply of roasted coffee. [2 marks]
(b)
Using a supply and demand , analyse the combined effect of the drought and the new technology on the equilibrium price and quantity of roasted coffee, assuming the drought effect is larger than the technology effect. [4 marks]
Solutions
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