Which of the Following Might Explain Why the Government Would

question 10

Multiple Choice

Which of the following might explain why the government would create a price ceiling for a certain good?

• A) The equilibrium price that would result in the market would be considered too high
• B) The equilibrium price that would result in the market would be considered too low
• C) The equilibrium quantity that would result in the market would be considered too high
• D) The equilibrium quantity that would result in the market would be considered too low
• E) The government never has a reason to create price floors or price ceilings

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Definitions:

Medicare Tax

A federal tax deducted from an employee's paycheck to fund the Medicare program.

Unemployment Tax

Taxes paid by employers to fund the unemployment insurance program, providing financial assistance to unemployed workers.

Federal Income Tax

A tax levied by the U.S. government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Social Security Tax

A tax that funds the Social Security program, imposed on both employers and employees based on wages earned.