Answer to Question #89729 in Economics for Michael

Question

(A) when a price ceiling is imposed in a market

1. A persistent shortage is created
2. A persistent surplus is created
3. Sellers of the product are made better off
4. Quantity supplied is greater than the quantity demanded

(B) in order for a price floor to be effective, it must be set.................the equilibrium price, while a price ceiling must be set...............the equilibrium price in order to be effective.

1. Above, below
2. Above, above
3. Below, above
4. Below, below

Answer 1

(A) when a price ceiling is imposed in a market, then a persistent shortage is created.

So, the correct answer is 1.

(B) in order for a price floor to be effective, it must be set....above....the equilibrium price, while a price ceiling must be set....below....the equilibrium price in order to be effective.

So, the correct answer is 1.