Economics (AS & A Level) · May / June 2023 · Paper 11 · Question 14
9708Methods and effects of government intervention in markets
The diagram shows the demand and supply curves for a good. The government fixes a maximum price of OP1. What would happen?
- AConsumers would have to be rationed to quantity OQ1.
- BThe government would have to introduce a subsidy of PP1.
- CThe market equilibrium quantity OQ would be demanded and supplied.
- DThe supply of quantity OQ2 would be guaranteed.
As printed in the paper
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Correct answer: C. The market equilibrium quantity OQ would be demanded and supplied.
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