A Price Floor Set Above the Equilibrium Price Is Binding

question 61

True/False

A price floor set above the equilibrium price is binding.

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Definitions:

Agent

In economics, an agent is an individual or entity that makes decisions, often in the context of trading or negotiating, on behalf of another person or group.

Informational Asymmetry

A situation where one party in a transaction has more or superior information compared to another. This often leads to an imbalance in power or decision-making.

Hidden Action

A situation in principal-agent relationships where the agent's actions are not fully observable by the principal, potentially leading to agency problems.

Hidden Characteristic

A quality of a product or service that is not immediately observable to the buyer, often leading to information asymmetry in the market.