If the Government Sets £1 as the Price Ceiling for a Pound

question 2

Multiple Choice

If the government sets £1 as the price ceiling for a pound of sugar when the equilibrium price is £2.50, _____.

• A) the number for goods used as a substitute for sugar will fall
• B) sugar will have to be exported to other countries to reduce the surplus in the market
• C) sellers may seek to sell sugar illegally at a price lower than the price ceiling
• D) the quantity of sugar demanded will exceed the quantity supplied

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Definitions:

Payroll Tax

Obligations imposed on both employers and employees, frequently measured as a segment of the payroll.

Equilibrium Wage Rate

The wage rate at which the quantity of labor demanded equals the quantity of labor supplied in the market.

Payroll Tax

A tax that an employer withholds and pays on behalf of its employees based on the wage or salary of the employee, typically used to fund social security and healthcare programs.

Labor Supply

The total hours that workers wish to work at a given wage rate, or the workforce available for employment.