(a)[2]
Explain how ‘a product’s price acts as a signal of its scarcity’.
(b)[2]
Explain one possible reason why the Government of Iran may have decided to raise the minimum price of fuel in 2019.
(c)[4]
Explain, with the help of a diagram, how an effective minimum price would affect the market for a basic food, such as rice in Haiti.
(d)[6]
‘Governments use stocks to smooth fluctuations in the price of a commodity like cocoa.' Consider whether government action to smooth fluctuations helps the workings of the price mechanism.
(e)[6]
Discuss whether maximum price controls will always be effective in controlling inflation.