Which of the following is an example of a price floor? A. The lowest price of gasoline this year was \$0.75 per litre. B. Superstore charges \$1 more than Metro charges for a 5 kilogram bag of sugar C. Stock prices hit a floor last week. D. The government guarantees that potato farmers will receive at least \$50 a tonne
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It is set above the equilibrium price in order to protect producers from prices that are too low. Show more…
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What is a price floor?Select one:a. A government regulation to set either a maximum or minimum price (eg min wage) for a product/service.b. A method of allocation where producers determine the price (value) of a product/service.c. A government regulation stipulating the maximum price (eg. rent) which can be charged for a product/service.d. An agreement between firms stipulating the maximum price that they will sell a product/service fore. A government regulation stipulating the minimum price (eg. min wage) which can be charged (paid) for a product
Jennifer S.
Refer to the above figure. If government sets the maximum legal price of gasoline at $2 per gallon, a) Is the $2 limit acts as a price floor , price ceiling or an equilibrium price b) Refer to the above figure. At a price of $2 per gallon, is there a surplus or a shortage and by how many gallons c) Refer to the above figure. At a price of $2 per gallon, what is the quantity demanded of gasoline ? d) Refer to the above figure. If the government set a price floor of $3.50 per gallon, would there be an excess quantity supplied, or excess quantity demanded and by how many gallons?
Andrew D.
When a price floor is above the equilibrium price, a quantity supplied will exceed quantity demanded, so there will be a surplus. b Quantity demanded will exceed quantity supplied, so there will be a shortage. c The market will be in equilibrium. d This is a trick question because price floors are generally set below the equilibrium price.
Mauya M.
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