Explain why a price floor set below the equilibrium price is ineffective
What will be an ideal response?
Price floors are legal minimums; it is legal to charge the floor price, or higher. If the equilibrium price is legal, that is, the equilibrium price is above the price floor so that the price floor is below the equilibrium price, then the price floor has no effect on the market because the market price does not change.
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The U.S. tariff on paper ____ the U.S. price of paper, _____ U.S. production of paper and _______the U.S. gains from trade
A. raises; increases; increases B. doesn't change; increases; increases C. doesn't change; doesn't change; decreases D. raises; increases; decreases
When U.S. banks borrow from one another, they must pay the
A) discount rate. B) prime rate. C) Fed funds rate. D) Interbank Offer Rate.