Price Floors and Price Ceilings Both Result in Lost Gains

question 325

True/False

Price floors and price ceilings both result in lost gains from trade and decreases in the quality of the product.

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Definitions:

Interventionist Trade Theory

A theory suggesting that government intervention in international trade through policies and regulations is necessary to correct market failures and protect domestic industries.

Trade Surplus

Occurs when a country's exports exceed its imports, indicating a positive balance of trade.

Neo-Mercantilism

A trade theory which suggests that trade generates wealth for a country with a trade surplus, with emphasis on rapid economic development.

Positive Balance

A financial situation where assets exceed liabilities, indicating a surplus.