Economics 9708 · AS & A Level · Government intervention in markets

Government intervention in markets — practice question

A government sets a ceiling price for electricity. Which statement explaining this action could be regarded as economically sound?

  • 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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