Economics 9708 · AS & A Level · Maximum and minimum prices

Maximum and minimum prices — practice question

In order to promote price stability, the government in country F runs a buffer stock scheme, with a minimum price of P1 and a maximum price of P2. The present demand and supply in the market are shown. What should the government do to make the scheme effective?

  • Abuy an amount equal to GH
  • Bbuy an amount equal to KJ
  • Cbuy an amount equal to LJ
  • Ddo nothing as the equilibrium price is below P1

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