Price Ceilings and Price Floors That Are Binding

question 133

Multiple Choice

Price ceilings and price floors that are binding

• A) are desirable because they make markets more efficient and more fair.
• B) cause surpluses and shortages to persist since price cannot adjust to the market equilibrium price.
• C) can have the effect of restoring a market to equilibrium.
• D) are imposed because they can make the poor in the economy better off without causing adverse effects.

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Definitions:

Competitive Firm

A business that operates in a market where it must compete with other firms for the same customers or resources.

Profit Maximizing

A strategy or process aimed at achieving the highest possible profit from business operations.

Technology Improvement

Enhancements or advancements in technology that lead to more efficient processes or better quality outcomes.

MC

Stands for Marginal Cost, which is the cost incurred by producing one additional unit of a good or service.