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

Maximum and minimum prices — practice question

To reduce the cost of living, governments have sometimes set a maximum price for certain goods at a level below the free market price. What is often an unwanted side effect of these policies?

  • Aaccelerating general inflation
  • Ban increase in profits above normal profits
  • Can increase in the stocks of unsold goods held by firms
  • Dshortages of the good

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