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

Maximum and minimum prices — practice question

The table presents market demand and supply for bananas across one year. When the market price is 8 cents per kg, the market is in disequilibrium. What action would the government need to take in order to reach market equilibrium at a price of 8 cents per kg?

  • Agrant a subsidy of 2 cents per kg to producers
  • Bimpose a tax of 4 cents per kg on consumers
  • Cpurchase the entire supply at 8 cents and sell at 4 cents
  • Dration consumers to 75 kg each per year

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