Government purchases supply to stabilize price at $3 and clear market Steps: - Note at$3/kg, demand (160k tonnes) exceeds supply (140k tonnes), creating a 20k-tonne shortage; natural equilibrium price is higher. - Identify need for intervention to force balance at $3withoutpric$3 ensures producers sell all output at that price, equilibrating supply side via government as buyer. Why D is correct: - By acting as the buyer for all supply at 2/kg shifts supply curve left, reducing supply further and raising equilibrium price above 3 and selling at 2/kg subsidy shifts supply right to …