SS S.

asked • 10/03/20

True or False question

TRUE OR FALSE-If the government imposes a price ceiling on a particular good that is too low, then the likely outcome of this action will be the surplus of this good on the market. On the other hand, if government imposes a price floor on a certain good that is too high, then the likely outcome of this action will be the shortage of this good on the market.

Charles W.

tutor
The answer is False, as price ceilings are below the equilibrium to be effective or binding and cause Qd to be greater than Qs (more people want the good when the price is low but suppliers don't want to supply as much) therefore there is a shortage with a price ceiling. A price floor are above the equilibrium to be effective or binding and cause the Qs to be greater than the Qd (if the price is high, less people want it but suppliers supply more at a high price) therefore it will cause a surplus with a price floor.
Report

10/03/20

1 Expert Answer

By:

Still looking for help? Get the right answer, fast.

Ask a question for free

Get a free answer to a quick problem.
Most questions answered within 4 hours.

OR

Find an Online Tutor Now

Choose an expert and meet online. No packages or subscriptions, pay only for the time you need.