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7 18 In the diagram,

S_{1} S_{1}

and DD represent the original supply and dem...

Mar 25, 2024

7 18 In the diagram,

S_{1} S_{1}

and DD represent the original supply and demand curves for an agricultural product. Bad weather then reduces supply to

\mathrm{S}_{2} \mathrm{~S}_{2}

. The government does not allow the price to rise above

\mathrm{OP}_{1}

. How much of the product will the government have to supply from a buffer stock if demand is to be met? A

O Q_{1}

Q_{1} Q_{3}

Q_{1} Q_{2}

Q_{2} Q_{3}

19 Country

X

joins an existing customs union, comprising

Y

and

W

, which has a common external tariff equal to

X

's initial tariff. After joining the customs union,

X

imports cars from

Y

which it previously imported from country V. How will this affect the price of cars in country

X

and the cost of producing the cars imported into country

X

? \begin{tabular}{|c|c|c|} \hline & price & cost of production \\ \hline A & lower & lower \\ B & lower & higher \\ C & no effect & lower \\ D & no effect & higher \\ \hline \end{tabular}