A Price Floor Policy Establishes a Minimum Price for a Market

question 93

Multiple Choice

A price floor policy establishes a minimum price for a market. Which of the following results from a binding price floor?

• A) Equilibrium
• B) Excess demand
• C) Excess supply
• D) Shortage

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Definitions:

Personal Gain

The benefit or advantage one receives or aims to receive from an action or investment, often measured in terms of financial or personal satisfaction.

Market System

A system of economics where the choices about investment, production, and distribution rely on the principles of supply and demand, and the pricing of goods and services is established freely in the market.

Business Risk

The potential for losses or less than expected returns stemming from the operational aspects of a business.

Macroeconomy

The study of the performance, structure, and behavior of an economy as a whole, including total national income, GDP, and inflation rates.