A-LevelEconomicsThe Price System and the MicroeconomyMay/June 2010Paper 1 Q101 Mark
The government imposes a maximum price of P2 on a product. [Figure shows a standard demand and supply diagram with price P1 and quantity Q1 at equilibrium, and a horizontal line at P2 above P1, intersecting demand at Q2 and supply at Q3. Supply curve is S, demand curve is D. Origin is O.] What will be the position after this action?
Aan equilibrium with price P₁ and quantity Q1
Ban equilibrium with price P2 and a quantity between Q2 and Q3
Can oversupply in the market by Q2Q3
Dshortage in the market of Q2Q3
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The correct answer is A. This question tests the candidate's understanding of the price system and the microeconomy within the Economicssyllabus. The examiner's mark scheme requires...
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