Price Floors and Price Ceilings

question 1

Multiple Choice

Price floors and price ceilings

• A)always reduce total surplus.
• B)reduce consumer surplus and increase producer surplus.
• C)reduce producer surplus and increase consumer surplus.
• D)Not enough information to determine.

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Definitions:

Government Price Supports

Economic policies or subsidies implemented by the government to maintain the market price of a commodity or product above its equilibrium level.

Surplus Production

The condition where the quantity of goods produced exceeds the quantity of goods consumed.

Farm Products

Goods that are produced through farming activities, including crops, livestock, and dairy products.

Food-Stamp Program

A government assistance program designed to help low-income households purchase food by providing them with food stamps or electronic benefits.