Asked by Simran Singh on Jul 28, 2024
Verified
A minimum price set above the equilibrium price is a:
A) demand price.
B) supply price.
C) binding price floor.
D) binding price ceiling.
Binding Price Floor
A minimum price set by the government that is above the equilibrium price, causing a surplus of the good.
Equilibrium Price
The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a balanced market.
- Ascertain the specific situations where price limits, including ceilings and floors, are regarded as obligatory.
Verified Answer
MA
Mae Anne BurcaJul 30, 2024
Final Answer :
C
Explanation :
A minimum price set above the equilibrium price is called a binding price floor. This is because it sets a legal minimum price for the good or service, which can create a surplus of the good if the demand for it is insufficient at that price.
Learning Objectives
- Ascertain the specific situations where price limits, including ceilings and floors, are regarded as obligatory.