11
QuizMultiple Choice

The American Market Economy — Test

Question 11 • Economics

Which statements correctly explain price floors and price ceilings? Choose four correct answers.

Answer
A
Ineffective price ceilings tend to be too low.
B
Effective price floors are set above equilibrium.
C
Price ceilings help consumers by lowering prices.
D
Effective price ceilings are set below equilibrium.
E
Ineffective price floors tend to be too high.
F
Price floors help producers by raising prices.

Explanation

A price floor sets a minimum price, so it can raise the price producers receive; to affect the market, it must be above equilibrium. A price ceiling sets a maximum price and must be below equilibrium to lower the price consumers pay. Thus, statements A, C, D, and E are correct. Floors below equilibrium and ceilings above equilibrium are ineffective, so B and F are incorrect.

AI-written and checked against the verified answer.

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