Price Ceilings and Price Floors

question 120

Multiple Choice

Price ceilings and price floors:

• A) cause surpluses and shortages in markets respectively.
• B) interfere with the allocation function of prices.
• C) make the rationing function of markets more efficient.
• D) cause demand and supply curves to shift thus having no effect on the rationing function of prices.

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Definitions:

World Price

The global market cost for a product or service, set by the overall demand and supply dynamics.

Baseballs

Spherical balls used in the sport of baseball, typically constructed from cork, rubber, yarn, and leather.

Net Welfare Loss

The decrease in total societal wellbeing and efficiency due to factors such as market failure or government intervention.

Tariff

A levy placed by a government on goods that are brought into or sent out of a country.