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

Maximum and minimum prices — practice question

What action must a government take to keep the price of an agricultural commodity stable?

  • Aadd the excess demand to a buffer stock; release an amount equal to the excess supply from a buffer stock
  • Bmeet excess demand by running down a buffer stock; purchase the excess supply and add it to a buffer stock
  • Csubsidise production; impose a tax on consumers
  • Dtax consumers of the commodity; subsidise production

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