ECONOMICS
PRICE CEILINGS AND FLOORS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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inefficiently low quantity
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wasted resources
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inefficient allocation of sales among sellers
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inefficiently low quality
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Detailed explanation-1: -Price floors prevent a price from falling below a certain level. When a price floor is set above the equilibrium price, quantity supplied will exceed quantity demanded, and excess supply or surpluses will result.
Detailed explanation-2: -Price ceilings often lead to inefficiency in that the goods being offered are of inefficiently low quality: sellers offer low-quality goods at a low price even though buyers would prefer a higher quality at a higher price.
Detailed explanation-3: -The correct answer is d. inefficient allocation of sales among sellers.
Detailed explanation-4: -A price floor or a price ceiling will prevent a market from adjusting to its equilibrium price and quantity, thus creating an inefficient outcome.