Asked by
Juliza Tovar
on Dec 11, 2024
Verified
A price floor set above an equilibrium price tends to cause persistent imbalances in the market because
A) Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage.
B) Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus.
C) Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage.
D) Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus.
Price Floor
A government-imposed minimum price above the market equilibrium price, preventing the price of a good or service from falling below this level.
Equilibrium Price
The equilibrium price is the market price at which the supply of an item equals its demand, leading to stable market conditions.
Market Imbalances
Situations where the quantity supplied of a good does not equal the quantity demanded, leading to surpluses or shortages.
- Gain insight into the role of price floors and ceilings in disturbing market equilibrium and their contribution to either surpluses or shortages.
Verified Answer
AA
Learning Objectives
- Gain insight into the role of price floors and ceilings in disturbing market equilibrium and their contribution to either surpluses or shortages.