If the government imposes a minimum price on a commodity
ECONOMICS
WAEC 2022
If the government imposes a minimum price on a commodity
- A. market surplus occurs
- B. the market will be cleared in the short-run
- C. excess demand occurs
- D. government regulation is no longer needed
Correct Answer: A. market surplus occurs
Explanation
Minimum price is often called price floor and it is fixed by the government to protect the producer or seller. Minimum price is set above the equilibrium price and when this occur, there will be excess supply over demand i.e surplus.
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