When a Binding Price Floor Is Imposed on a Market

question 35

Multiple Choice

When a binding price floor is imposed on a market to benefit sellers,

• A)every seller in the market benefits.
• B)all buyers and sellers benefit.
• C)every seller who wants to sell the good will be able to do so,but only if he appeals to the personal biases of the buyers.
• D)some sellers will not be able to sell any amount of the good.

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Definitions:

Negative Income Tax

A taxation framework where individuals earning under a specified threshold get additional compensation from the government rather than contributing tax.

Earned Income Tax Credit

A refundable tax credit for low- to moderate-income working individuals and families, designed to encourage and reward work.

Negative Income Tax

A tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes.

Government Intervention

Actions taken by government to influence or regulate economic activity, often to correct market failures and promote welfare.