A Level Economics (9708)•9708/12/M/J/20

Explanation
Offsetting supply shift to maintain constant total revenue Steps:
- Locate initial equilibrium at intersection of D and S₁: quantity Q₁ = 2000 tonnes, price P₁.
- After shift to S₂ (rightward by 2000 tonnes), new equilibrium at Q₂ = 3000 tonnes, P₂ < P₁, so revenue P₂ × 3000 < P₁ × 2000.
- Farm income is total revenue (price × quantity); requires new demand D' intersecting S₂ at P' and Q' where P' × Q' = P₁ × 2000.
- Parallel rightward horizontal shift of demand by X tonnes increases quantity demanded by X at each price; diagram shows X = 1000 yields matching revenue. Why B is correct:
- A 1000-tonne rightward shift in demand restores equilibrium total revenue equal to initial P₁ × Q₁, per diagram's quantity-price values. Why the others are wrong:
- A: 500-tonne shift leaves revenue below initial due to insufficient quantity increase.
- C: 2000-tonne shift raises revenue above initial via excessive price and quantity gains.
- D: 5000-tonne shift dramatically overincreases revenue, far exceeding original income.
Final answer: B
Topic: The interaction of demand and supply
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