Accounting Multiple Choice Question – 25 June 2025

If the minimum price for a good is set by the government above the current free market equilibrium price, what will be the effect (if any) on demand for and supply of the good in the short term?

Select ONE answer:

1. Demand for the good will fall; supply of the good will rise
2. Demand for the good will rise; supply of the good will fall
3. Both demand for and supply of the good will rise
4. There will be no effect on either demand for or supply of the good

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > Suppliers will be encouraged to supply at that price so supply will increase, whilst at a price above the market equilibrium price, the demand will fall.
2. Not correct
3. Not correct
4. Not correct

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