In Order to Be Binding,a Price Floor

question 122

Multiple Choice

In order to be binding,a price floor

• A)must lie above the free-market equilibrium price.
• B)must lie below the free-market equilibrium price.
• C)must coincide with the free-market equilibrium price.
• D)must be high enough for firms to earn a profit.

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Definitions:

Supply And Demand Equilibrium

The point at which the quantity of a product demanded by consumers equals the quantity supplied by producers.

Frictional Unemployment

This refers to unemployment that occurs when people are between jobs or are entering the workforce for the first time.

Labor Supplied Exceeding

A situation where the quantity of labor offered by workers surpasses the quantity demanded by employers.

Long-run Unemployment

Unemployment that persists in an economy for an extended period, often due to fundamental shifts in the economy or structural changes in the labor market.