A-LevelEconomicsGovernment microeconomic intervention9708/12 · May/June 2025 · Q141 Mark
The diagram shows the demand and supply for rice. The market for rice is initially in equilibrium at a price of P₁. The government introduces a maximum price of Pmax. At the same time the supply of rice increases. [Figure 14.1] What is the impact of these changes on the market for rice?
This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.
Anew market equilibrium will be established.
BAn illegal market for rice will develop.
CThere will be a shortage of rice.
DThere will be a surplus of rice.
✓ Correct answer
A: new market equilibrium will be established.
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