Economics (AS & A Level) · May / June 2022 · Paper 11 · Question 17
9708Methods and effects of government intervention in markets
The diagram shows the market for electricity in a country that has a fixed supply of electricity and introduces a maximum price to make it affordable for poorer households. What will be the effect of this?
- AIt will encourage producers to build more power stations in the future.
- BIt will encourage the development of renewable sources of electricity.
- CIt will increase producer surplus.
- DIt will increase the probability of power cuts.
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Correct answer: D. It will increase the probability of power cuts.
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