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Government intervention

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Question 10

The government decides to impose a maximum price on domestic electricity tariffs below the market equilibrium price.

Maximum Price Diagram

What is the most likely impact of this policy?

An excess supply of domestic electricity

An increase in the producer surplus of energy suppliers

An excess demand for domestic electricity

An automatic elimination of informal shadow markets

Government intervention Questions

  1. A Level
  2. /Economics
  3. /Government intervention