A government decides to set a minimum price for canned energy drinks above the current market equilibrium price. The most likely impact of this scheme will be
a rise in the consumption of canned energy drinks.
a shortage of canned energy drinks if the price elasticity of supply is perfectly inelastic.
an excess supply of canned energy drinks.
no excess supply of canned energy drinks if the price elasticity of demand is perfectly inelastic.
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.