Practice Questions
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What is the effect of a price floor on a market?
A price floor sets a minimum price for a good. Other options are incorrect because Some might think a price floor causes a shortage; It's a common mis...
What is a potential consequence of implementing a price floor in a market that leads to welfare loss?
A price floor sets a minimum price. Other options are incorrect because Some might think a price floor helps consumers by lowering prices; It's a comm...
How does the implementation of a minimum wage as a price floor affect the incentives for production in the labor market?
When the minimum wage is set too high, employers may not afford to hire as many workers. Other options are incorrect because Some might think that hig...
How does the implementation of a price floor by the government affect consumer welfare in a market, and what potential welfare loss can occur as a result?
A price floor sets a minimum price for goods. Other options are incorrect because Some might think a price floor lowers prices, but it actually raises...
What effect does the implementation of a price floor have on market equilibrium, particularly in the context of government intervention and price controls?
A price floor sets a minimum price for a good. Other options are incorrect because Some might think a price floor lowers prices; It's a common mistake...
What is a price floor in economics?
A price floor is the lowest price that can be charged for a good or service. Other options are incorrect because This answer confuses a price floor wi...
What is the effect of a price floor on market equilibrium?
A price floor sets a minimum price for a good. Other options are incorrect because Some might think a price floor causes a shortage; It's a common mis...
What is likely to happen in a market if the government sets a price floor above the equilibrium price?
When a price floor is set above the equilibrium price, sellers can't lower their prices. Other options are incorrect because Some might think a shorta...
What is the likely economic impact of a binding price floor on a competitive market?
A binding price floor sets a minimum price for a good. Other options are incorrect because Some might think a price floor lowers supply and raises dem...
Which of the following statements correctly describe the effects of a binding price floor in a perfectly competitive market? Select all that apply.
A binding price floor does not lead to any of the effects listed. Other options are incorrect because Some might think a price floor creates a surplus...
A government has set a price floor on wheat. Which of the following outcomes is most likely to occur as a result of this price floor?
A price floor means the government sets a minimum price for wheat. Other options are incorrect because Some might think that prices will drop to match...
Price Floor:Surplus :: Price Ceiling:?
A price ceiling sets a maximum price. Other options are incorrect because Equilibrium is when supply and demand are balanced; A surplus happens when t...
How does a binding price floor affect the market for a good?
A binding price floor sets a minimum price that is above the market price. Other options are incorrect because Some might think a price floor makes go...
A government decides to set a price floor on wheat, establishing it at $8 per bushel, while the equilibrium price is $6. What is the most likely economic consequence of this price floor in the wheat market?
A price floor means the lowest price allowed is $8. Other options are incorrect because Some might think a price floor creates a shortage; It's a comm...
Arrange the following steps in the process of how a price floor affects a market, starting from government intervention to market consequences: A) Government sets a price floor above equilibrium, B) Quantity supplied increases due to higher prices, C) Surplus occurs as quantity supplied exceeds quantity demanded, D) Market adjusts to new conditions.
The government first sets a price floor above the normal price. Other options are incorrect because This option suggests that a surplus happens before...
What is the primary effect of implementing a binding price floor in a perfectly competitive market?
A price floor sets a minimum price for a good. Other options are incorrect because Some might think the market price will just rise to meet the floor;...
A binding price floor in a competitive market guarantees that all suppliers will sell their products at that minimum price, resulting in no surplus or shortage of the good in the market.
A price floor sets a minimum price. Other options are incorrect because Some might think a price floor means no extra products are made; This answer s...
When a government sets a price floor above the equilibrium price, it creates a situation where the quantity supplied __________ the quantity demanded, leading to a surplus in the market.
When the price is set too high, sellers make more products than buyers want. Other options are incorrect because Some might think that supply and dema...
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