Which of the following is NOT associated with minimum price legislation?
- wastages of resources
- excess supply
-
excess demand
- unemployment
The correct answer is: C
Explanation
Minimum price legislation, also known as price floors, is a form of government intervention that establishes a legally mandated minimum price for a particular good or service. The purpose is to ensure that producers receive a certain level of income or to protect certain industries. The effects are:
a. Excess supply over demand
b. Inflationary result from price increase
c. A waste of perishable products occur
d. Unemployment will result from excess supply of labour
e. Inefficiency in the use of production resources