A price floor is a government-mandated
A) minimum price below which legal trades cannot be made.
B) maximum price above which legal trades cannot be made.
C) minimum price at which all units of the good must be legally sold.
D) minimum price below which legal trades can be made.
A
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When a person does NOT have to pay the full costs for using a scarce resource, then
A) the use of the resource is not affected since society pays for the resource. B) more of the resource will be used. C) the internal costs of using the resource are too high. D) the social costs of the resource are less than they would be if the "correct" amount of the resource were being used.
An economy has full-employment output of 5000. Government purchases are 1000. Desired consumption and desired investment are given by Cd = 3000 - 2000r + 0.10Y Id = 1000 - 4000rwhere Y is output and r is the real interest rate. The real interest rate that clears the goods market is equal to
A. 8.33%. B. 2.50%. C. 25.00%. D. 1.25%.