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ZIMSEC O-Level Economics

6.7.4Government intervention on prices

Government intervention on prices in ZIMSEC O-Level Economics: what the syllabus expects you to know, the learning objectives and how to practise.
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Learning objectives

What the syllabus expects you to be able to do.

  1. 6.7.4.1Form 4: explain price ceilings and price floors and illustrate their effects (shortages and surpluses).

Lessons

  • Maximum and minimum prices (price ceilings and floors)

    30 min

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Sample question

A sample question on this topic. Answer it, check it, then read the worked answer.

Government intervention on prices: sample question

1 mark

The table shows the daily market for bread in a fictional town.

Price per loaf (US$) Quantity demanded (loaves per day) Quantity supplied (loaves per day)
1 3,750 2,400
1.20 3,450 2,550
1.40 3,150 2,700
1.60 2,850 2,850
1.80 2,550 3,000
2 2,250 3,150

The government sets a maximum price of US$1.20 a loaf. What is the shortage?

Choose one answer

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