Introduction to Business EconomicsMODULEQuestion 600 of 209
All Questions

Administered prices refer to:

Options

APrices determined by forces of demand and supply
BPrices determined by sellers in the market
CPrices determined by an external authority which is usually the government
DNone of the above.
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Correct Answer

✅ Option c — Prices determined by an external authority which is usually the government

All Options:

  • APrices determined by forces of demand and supply
  • BPrices determined by sellers in the market
  • CPrices determined by an external authority which is usually the government
  • DNone of the above.

Detailed Solution & Explanation

• Administered prices are a key concept in economics, particularly when discussing market interventions. • The correct answer is (C) Prices determined by an external authority which is usually the government. This definition directly aligns with the economic understanding of administered prices. These are prices that are not set by the free play of market forces (demand and supply) but rather by a regulatory body, most commonly the government. Examples include minimum support prices for agricultural products, price controls on essential goods, or utility tariffs. The purpose is often to achieve social objectives, stabilize markets, or protect consumers/producers. • Option (A) Prices determined by forces of demand and supply is incorrect because this describes market-determined prices, which are the opposite of administered prices. In a free market, the equilibrium price is found where the quantity demanded equals the quantity supplied. • Option (B) Prices determined by sellers in the market is also incorrect. While sellers do set their initial asking prices, in a competitive market, these prices are ultimately influenced and adjusted by consumer demand and competitor pricing, reflecting market forces rather than a unilateral determination. Administered prices imply a higher authority dictating the price.

About This Chapter: Introduction to Business Economics

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Meaning, Scope, Price Mechanism

This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.

Related Comparison Tables

Microeconomics vs Macroeconomics: The Complete CA Foundation GuidePositive vs Normative Economics: Fact vs Opinion

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