BUSINESS ADMINISTRATION
MARKETING MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cost & Expenses
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Supply & Demand
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Consumer Perception
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Competition
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Government
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Detailed explanation-1: -Price floors and price ceilings are government-imposed minimums and maximums on the price of certain goods or services. It is usually done to protect buyers and suppliers or manage scarce resources during difficult economic times.
Detailed explanation-2: -Practical Example of a Price Ceiling In equilibrium, the price of rent is $1, 000 with a quantity of 100. Due to the extremely high demand for rental housing, the government decided to regulate the situation by imposing a price ceiling of $900.
Detailed explanation-3: -Price ceilings are enacted in an attempt to keep prices low for those who demand the product-be it housing, prescription drugs, or auto insurance. But when the market price is not allowed to rise to the equilibrium level, quantity demanded exceeds quantity supplied, and thus a shortage occurs.
Detailed explanation-4: -A price ceiling above the competitive equilibrium price will result in a surplus. A price ceiling below the competitive equilibrium price will result in a shortage.