Each time the government imposes a minimum price or wage, the result is almost always excess supply. What matters Is the extent to which this is a problem.

Several loss-making retailers including homebase, house of Fraser and pound world have had to decide whether to shut down operations or carry on while making losses. In contrast the music streaming firm Spotify was valued at 27 billion in 2018,despite never having made a profit in any year since it was founded. Spotify has been more focused on expanding market share

Discuss the validity of the traditional economic assumption that the main objective of firms is to maximize profits. 25 marks