Suppose that the equilibrium price of an article is N5.00 but the government fixes the price by law at N4.00, the supply will be
The same as equilibrium supply
Greater than equilibrium supply
Less than the equilibrium supply
Determined later by government
None of these
Explanation
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Discussions (163)
I believe the answer is c because as a marketer yu go t market to make a profit so in this case instead of you make a profit you then find out that government have decreased the amount inwhich you proposed in your mine to sell the goods, so therefore you will be discouraged to supply more. Thanks
It is C becos d law of Supply states dat the Lower the Price,the lower the Quantity Supplied...therfore,since Govt reduces price below the Ep,Supply will b less dan demand..(Excess demand)This Effect is known as Maximum Price Contol...
The answer is option c. The reason 4 dis is dat d govt fixes d price below equilibrium n therefore, called minimum price legislation.
Equilibrium price is the price which favours both supplies and demands in other words suppliers and demanders. Both are willing to supply and demand. When the Government reduces the price from equilibrium price, it will only favour demand/demanders and not supply/suppliers so they will automatically reduce supply
When the government intervene in this wise, it means the commodity is essential. There is something called Minimum wage and Maximum price. In the case Minimum price system has been used.Most times it does not favor producers and supplier thus supply of goods and services is reduced. There are graphs that shows this explanation. Check economics textbook to learn more
D correct answer is C bcos no bdy is ready to sell at lost. D sellers surpose to sell at 50 wich is d eqilibrum and a gov forcefull by law reduce d price.
1st of all, rememba d law of demand & supply, d higher d price, d lower d quantity, d lower d price d higher d quantity demanded. Hence d price is lower, d quantity of goods demanded will be high, rationin ll occur becos of shortage of goods, which ll let d supply 2 be lesser than d equilibrium price
Already u have been told that the equilibrum price is n5.And the government fixes the price to ben4 .it therefore means logically the answer is less than equilibrum price
When the price of a commodity is low (below the equilibrum price), the producers will be discouraged to sell, based on the law of supply. The answer 'c' is correct.
suppliers tends to supply at high price so automatically when d prise is low d supply is also low
D answer is C. Bkus govt has fixed a price ceiling or maximum price legislation on d guds, hence it is below d equilibruim and there is likely 2 b shortage in d market, take fuel as an example, govt fixin maximum price at 97 as against 140, which is below d equilibruim thereby creating shortage in d market which nw lead 2 people seling d product {fuel} at black market
D ans c cos in economics d law of supply states dat d higher d price d higher d quantity supplied, d lower d price, d lower d quantity supplied ceteris peribus. so d price here is less therefore d supply must b less.
