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Role of Government in Microeconomics · Paper 1 — Free Economics SL Practice Questions
1FoundationSAQ-SEffects of government policies on markets4 marksPaper 1~6 min
In the market for rice in Thailand, the government imposes a price floor above the equilibrium price to support farmers' incomes.
(a)
Define the term "price floor". [2 marks]
(b)
Explain one likely effect of this price floor on the market for rice in Thailand. [2 marks]
Solutions
2MasterySAQ-SEffects of government policies on markets4 marksPaper 1~6 min
The government of Viet Nam has imposed a maximum price (price ceiling) on rice, a staple food, set below the free-market equilibrium price, to ensure affordability for low-income households.
(a)
Using a fully labelled supply and demand , explain the effect of this price ceiling on the rice market. [2 marks]
(b)
Analyse one reason why this price ceiling might lead to the emergence of a black market for rice. [2 marks]
Solutions
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