Economics (AS & A Level) · May / June 2023 · Paper 32 · Question 17
9708Methods and effects of government intervention in markets
A government imposes a maximum price for electricity. Which statement justifying this measure might be considered valid on economic grounds?
- AIt will encourage electricity suppliers to invest in additional capacity.
- BIt will increase the incentive for consumers to conserve energy.
- CIt will prevent the monopolistic exploitation of consumers.
- DIt will prevent the rationing of electricity through power cuts.
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Correct answer: C. It will prevent the monopolistic exploitation of consumers.
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