ECONOMICS
MARKETS AND PRICES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -But at a higher price, the demand for the commodity decreases. The consumers demand less than the equilibrium ‘quantity demanded’, so the sellers cannot find ‘buyers’ for all their commodities. This causes ‘excess supply’ in the market.
Detailed explanation-2: -Laws enacted by the government to regulate prices are called price controls. Price controls come in two flavors. A price ceiling keeps a price from rising above a certain level-the “ceiling”. A price floor keeps a price from falling below a certain level-the “floor”.
Detailed explanation-3: -Therefore, the correct option is b, price ceilings cause goods to be rationed by some other means than legally determined market prices.
Detailed explanation-4: -The answer is d). In a market equilibrium, the quantity demanded is equal to the quantity supplied, hence there is no excess demand or excess supply.