Why Are Binding Price Floor Laws Passed

question 9

Multiple Choice

Why are binding price floor laws passed?

• A) They make goods less expensive.
• B) They make goods available to the largest number of customers.
• C) They encourage producers to produce goods in the most cost-efficient fashion.
• D) They help producers receive higher prices for products sold in the legal market.
• E) They discourage the formation of illegal black markets.

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Definitions:

Cost Reduction

A strategic financial action aimed at decreasing expenses to improve profitability.

Stock Acquisition

The process of obtaining ownership in a company by purchasing its stock.

Cash Acquisition

The process of acquiring another company or its assets using cash as a means of payment rather than stocks or other forms of compensation.

Amalgamation

The process of combining two or more companies into a single new entity, typically to enhance competitive strengths or streamline operations.