CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 88 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 88
Topic #: 1

Which ONE of the following statements best describes the impact of a government minimum price established above free market price?

AIt will create a shortage of the product and incentives for producers and consumers to evade the policy

BIt will create a surplus of unsold produce and reduce farm incomes

CIt will not affect market price or producer incomes at the present time

DIt will increase farm incomes but may eventually force the government to introduce maximum quotas on production

Show Suggested Answer

Suggested Answer: B

by Devora at May 21, 2024, 01:09 AM

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Van

5 days ago

Hmm, I was leaning towards option A. A government-imposed minimum price would disrupt the normal market forces and create incentives for people to try and get around the policy.

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Talia

10 days ago

I think option B is the correct answer. A minimum price above the free market price will lead to a surplus of unsold produce and reduce farm incomes.

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Noel

13 days ago

But if the minimum price is set above the free market price, wouldn't that lead to a surplus?

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Laurel

14 days ago

I disagree, I believe it's B.

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Noel

24 days ago

I think the answer is A.

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