ECONOMICS
PRICE CEILINGS AND FLOORS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
price ceiling
|
|
|
price floor
|
|
|
Either A or B
|
|
|
None of the above
|
Detailed explanation-1: -Yes, rent control is considered to be a price ceiling example, since rents can be demanded by different owners differently, therefore there has to be a price limitation so that rent is affordable and can be paid.
Detailed explanation-2: -A price ceiling is a type of price control, usually government-mandated, that sets the maximum amount a seller can charge for a good or service. Price ceilings are typically imposed on consumer staples, like food, gas, or medicine, often after a crisis or particular event sends costs skyrocketing.
Detailed explanation-3: -The most important example of a price floor is the minimum wage. A price ceiling is a maximum price that can be charged for a product or service. Rent control imposes a maximum price on apartments in many U.S. cities.
Detailed explanation-4: -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”. We can use the demand and supply framework to understand price ceilings.