______is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service
A proce floor
C. price policy
B. price ceiling
D. income policy
The correct answer and explanation is:
The correct answer is A. price floor.
A price floor is a government- or group-imposed limit that sets the minimum price that can be charged for a product, good, commodity, or service. It is typically implemented to ensure that prices do not fall below a certain level, which might harm producers or service providers. The most common examples of price floors are minimum wage laws, where the government sets the lowest legal amount an employer can pay workers.
Price floors are usually put in place to protect the interests of suppliers or producers. For example, if the government sets a price floor on agricultural products, it ensures that farmers will not sell their goods below a price that would cause them to lose money. Without this floor, the market price could drop to a point where producers can no longer afford to produce the goods or services.
However, price floors can have unintended negative consequences. If the floor is set above the equilibrium price (the price at which supply equals demand), it can result in a surplus of goods. For instance, if the price floor for a commodity like wheat is set too high, producers may produce more than consumers are willing to buy at that price, leading to excess supply. This surplus may lead to wasted resources or government intervention to purchase and store the excess.
In contrast, a price ceiling is the opposite of a price floor. It sets a maximum price that can be charged, typically to protect consumers from excessively high prices. An example of a price ceiling is rent control, where landlords are prohibited from charging more than a certain amount for rental properties.
Price floors are an important economic tool, but they require careful balancing to avoid market distortions.