passwella.
Menu

JAMB Economics 2001 Question 21

Question 21

Price Determination

If government fixes price below the equilibrium price, what effect will it have on demand?

  1. A.Quantity demanded and supplied will be equal
  2. B.Quantity supplied will be greater than quantity demanded
  3. C.Quantity demanded will increase
  4. D.Quantity demanded will decrease
Show the answer and explanation

Answer: C (Quantity demanded will increase)

Explanation

A lower price makes buyers want more, so quantity demanded rises (and exceeds quantity supplied, causing a shortage).