Asked by
Sakshi Dhakate
on Oct 25, 2024
Verified
What is the difference between a price support and a price floor?
A) A price support is below equilibrium; a price floor is above it.
B) A price support is above equilibrium; a price floor is below it.
C) Government buys the excess supply to maintain a price floor, but not a price support.
D) Government buys the excess supply to maintain a price support, but not for a price floor.
E) There is no difference between the two.
Price Support
Government intervention in a market to maintain the price at a certain level, usually done through the purchase of surplus stock or direct subsidies to producers.
Price Floor
A minimum price, set by law or regulation, that must be paid for a good or service; often implemented to protect producers.
- Acquire knowledge of the economic outcomes resulting from state interference in markets, particularly through measures like price minimums and price subsidies.
- Understand the government's part in resolving issues in market functionality and the expected outcomes of such actions.
Verified Answer
SA
Learning Objectives
- Acquire knowledge of the economic outcomes resulting from state interference in markets, particularly through measures like price minimums and price subsidies.
- Understand the government's part in resolving issues in market functionality and the expected outcomes of such actions.