June 2014 Context 1 Essay Model Answer

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Diagram 1:

From this diagram we can see that as the demand for crops such as sugar and wheat (making sure I’m sticking to this particular question and not going off on a tangent) for biofuel production increases, this causes an extension of supply, pushing the price up to P2. This means there is now further incentive for farmers to produce crops for biofuels, as the price is higher and they can receive more revenue from selling in this market. However, this means there are less crops available for the food market, causing a reduction in supply in that market, as shown in diagram 2: (Note that I would not normally encourage a candidate to draw more than one diagram for an essay question, but I feel it is necessary here)

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