A Price Floor Is

question 158

Multiple Choice

A price floor is:

• A) a maximum price allowed by law.
• B) a minimum price allowed by law.
• C) able to produce an efficient outcome.
• D) a tool used to increase government revenues.

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Definitions:

Equilibrium Quantity

The quantity of goods or services supplied that is exactly equal to the quantity demanded at the market price.

Supply Increases

A situation where the quantity of a good or service that producers are willing and able to sell at a specific price rises.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market stability.

Demand Decrease

A downward shift in the demand curve for a product, indicating that consumers now desire less of it at every price.