Government\'s frequently set price floors that maintain minimum prices (e.g. min
ID: 2784965 • Letter: G
Question
Government's frequently set price floors that maintain minimum prices (e.g. minimum wage) and price ceilings that maintain maximum prices (e.g. interest rates, rent for housing, and in the past gasoline). Price floors
increase total sales ( sellers' face higher prices)
shift the demand down (demand curve shifts to the left)
always make every sellers better off
all of the above
none of the above
a.increase total sales ( sellers' face higher prices)
b.shift the demand down (demand curve shifts to the left)
c.always make every sellers better off
d.all of the above
e.none of the above
Explanation / Answer
Price Floors like minimum wages will increase the cost of the seller.
Thus the Seller would increase the Selling Price in order to cover the cost which will shift the supply curve down as the seller would be willing to sell less at the same price.
A and C are not true as the Seller would not be better off because her Cost has increased.
Thus the correct option is E
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