A Price Floor

question 11

Multiple Choice

A price floor

• A) always results in a surplus.
• B) results in a surplus if the floor price is higher than the equilibrium price.
• C) results in a shortage if the floor price is higher than the equilibrium price.
• D) always results in a shortage.

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Definitions:

Laspeyres Price Index

A price index that measures the change in the price level of a basket of goods and services, using the quantities of the base period as weights.

Base Year

A specific year against which economic growth or other variables are measured and compared.

Current Year

The present calendar year in which a transaction or event occurs or is being discussed.

Laspeyres Price Index

An economic measure that calculates the change in the price of a basket of goods and services, using the quantities purchased in the base year as weights.