13
QuizMultiple Choice

Elasticity and Incentives

Question 13 • 2102320-Economics HONORS - Edgenuity Teacher

What is the difference between a price floor and a price ceiling?

Answer
A
A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
B
A price floor is the maximum price allowed for a good. A price ceiling is the minimum price allowed for a good.
C
A price ceiling below the equilibrium price has no effect.
D
A price floor above the equilibrium price has no effect.

Explanation

A price floor sets the lowest legal price at which a good can be sold, while a price ceiling sets the highest legal price. Choice A states these definitions correctly. Choices C and D describe effects incorrectly: a ceiling below equilibrium or a floor above equilibrium can affect the market.

AI-written and checked against the verified answer.

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