A-LevelEconomicsGovernment microeconomic intervention9708/12 · Oct/Nov 2022 · Q151 Mark
A government fixes a maximum price for a product in order to increase its consumption. What would be the likely outcome of such a policy?
AConsumption will fall if the maximum price is above the current equilibrium price.
BConsumption will rise if the maximum price is below the current equilibrium price.
CProduction will fall if the maximum price is above the current equilibrium price.
DProduction will fall if the maximum price is below the current equilibrium price.
✓ Correct answer
D: Production will fall if the maximum price is below the current equilibrium price.
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