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

Maximum and minimum prices — practice question

The diagram illustrates the spectacles market. At first, market equilibrium is at price PO, with quantity Q3 being purchased and sold. The government then introduces a maximum price of PX and also a minimum price of PM. What impact will these measures have on the spectacles market?

  • Acreate a shortage of spectacles equal to Q1Q5
  • Bcreate a surplus of spectacles equal to Q2Q4
  • Ccreate a surplus of spectacles equal to Q3Q4
  • Dleave the quantity bought and sold unchanged

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