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

Maximum and minimum prices — practice question

The table presents the market demand and market supply for kiwifruit during a year. When the market price is $3 per kg, the market is in disequilibrium. What action would the government need to take in order to bring about market equilibrium at a price of $3 per kg?

  • Aimpose an indirect tax of $2 per kg on kiwifruit
  • Bpurchase the entire supply at $3 per kg and sell at $2 per kg
  • Cset a maximum price of $3 per kg
  • Dsubsidise kiwifruit production by $2 per kg

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