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JAMB Economics 1984 Question 18

Question 18

Price Determination

The control of prices by legislation usually produces a number of consequences. Which of the following is NOT an associated problem of maximum price control?

  1. A.Excess supply
  2. B.Favouritism
  3. C.Bribery and corruption
  4. D.Black marketing
  5. E.Hoarding.
Show the answer and explanation

Answer: A (Excess supply)

Explanation

A maximum price below equilibrium creates a shortage (excess demand), not excess supply; favouritism, bribery, black markets and hoarding follow from the shortage.