Microeconomics

Table of Contents

1. Topic pack - Microeconomics - introduction
2. 1.1 Competitive Markets: Demand and Supply
3. 1.1 Competitive Markets: Demand and Supply - notes
4. 1.1 Competitive markets - questions
5. 1.1 Competitive markets - simulations and activities
6. 1.2 Elasticities
7. 1.2 Elasticities - notes
8. Section 1.2 Elasticities - questions
9. Section 1.2 Elasticities - simulations and activities
10. 1.3 Government intervention
11. 1.3 Government Intervention - notes
12. 1.3 Government intervention - questions
13. 1.3 Government intervention - simulations and activities
    1. DragIT - Incidence of tax
    2. DragIT - Tax revenue
    3. DragIT Maximum prices
    4. DragIT - Intervention in agricultural markets
    5. DragIT - Intervention in agricultural markets (2)
14. 1.4 Market failure
15. 1.4 Market failure - notes
16. Section 1.4 Market failure - questions
17. Section 1.4 Market failure - simulations and activities
18. 1.5 Theory of the firm
19. 1.5 Theory of the firm - notes (HL only)
20. Section 1.5 Theory of the firm - questions
21. Section 1.5 Theory of the firm - simulations and activities
22. Print View

DragIT - Intervention in agricultural markets

Added to the problems of price fluctuations and relative declining income that they have faced, most European farmers have also suffered from growing competition from other food-exporting nations around the world (e.g. USA, Canada, Australia and parts of Africa). One solution to this specific problem would be to set a tariff on all imported products that compete directly with domestic producers.

The following diagram shows the domestic demand and supply for wheat in a given country. The world price of wheat is £3 per tonne (shown by the horizontal red line).

1

Import tariff What will be the level of domestic production at a world price of £3 per tonne? a) 5,000 tonnes per annum b) 15,000 tonnes per annum c) 25,000 tonnes per annum d) 35,000 tonnes per annum Yes, that's correct. Domestic production occurs where the domestic supply curve meets the world price. This is at a quantity of 15,000 tonnes.No, that's not right. Domestic production occurs where the domestic supply curve meets the world price. This is at a quantity of 15,000 tonnes.Your answer has been saved.

2

Import tariff What will be the level of imports at a world price of £3 per tonne? a) 15,000 tonnes per annum b) 20,000 tonnes per annum c) 25,000 tonnes per annum d) 30,000 tonnes per annum Yes, that's correct. It is 35,000 demanded - 15,000 supplied domestically.No, that's not right. It is 35,000 demanded - 15,000 supplied domestically.Your answer has been saved.

3

Import tariff What will be the level of imports at a world price of £4 per tonne? a) 10,000 tonnes per annum b) 20,000 tonnes per annum c) 25,000 tonnes per annum d) 30,000 tonnes per annum Yes, that's correct. It is 30,000 demanded - 20,000 supplied domestically.No, that's not right. It is 30,000 demanded - 20,000 supplied domestically.Your answer has been saved.