The quantity of goods exchanged in a market will be above the equilibrium a. only when...
The quantity of goods exchanged in a market will be above the equilibrium
a. only when there is a price floor.
b. only when there is a price ceiling.
c. when there is a price floor or a price ceiling.
d. under none of the above.
explain why
Homework Answers
Option d
Price floor: It is the government intervention into market to support producers, hence the price would be more than equilibrium price leading to reduced demand there by reduces quantity traded when compared with earlier equilibrium quantity.
Price ceiling: It is also a government intervention to help buyers by keeping the price below than the earlier equilibrium price which demotivates producers there by reducing the quantity traded than earlier equilibrium quantity.
A market operates efficiently when there is no intervention like price floor or price ceiling.
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