Question:

3 In 2019, India became the world’s largest producer of sugar. Sugar cane is grown in the country
by a large number of mainly low‐income farmers. They sell sugar cane to mills which process the
sugar cane into sugar. Processing the sugar cane is more capital‐intensive than growing it. The
Indian government sets a minimum price for sugar cane and subsidises the export of sugar.
(a) Define a minimum price. [2]
(b) Explain two advantages of capital‐intensive production. [4]
(c) Analyse why low‐income farmers are likely to have low living standards. [6]
(d) Discuss whether or not a government subsidy on the export of sugar will help it achieve its
macroeconomic aims. [8]

Sample Answers: