JAMB - Economics (2024 - No. 43)
The following will occur when maximum price is fixed below the free market price EXCEPT that
black market will be encouraged
excess demand will occur
excess supply will occur
rationing of commodities will occur
Explanation
Maximum price is fixed above the equilibrium price to protect the consumers or the buyers. When the price is fixed below the equilibrium price, there will be excess demand over supply and it will lead to:
- rationing
- hoarding
- black market
- bribery and corruption
- rationing
- hoarding
- black market
- bribery and corruption
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