Asked by courtney mitchell on Jul 08, 2024
Verified
A price floor set above the equilibrium price is not binding.
Price Floor
A government- or authority-imposed minimum price that can be charged for a good or service to prevent prices from dropping too low.
Equilibrium Price
The price at which the quantity of a good or service demanded by buyers equals the quantity supplied by sellers.
- Elucidate on the dissimilarities between binding and non-binding price measures, specifically ceilings and floors.
Verified Answer
SG
Shomi GhoshJul 13, 2024
Final Answer :
False
Explanation :
A price floor set above the equilibrium price is binding because it prevents the market price from falling to its equilibrium level, leading to a surplus of the good or service.
Learning Objectives
- Elucidate on the dissimilarities between binding and non-binding price measures, specifically ceilings and floors.