Price floors are typically accompanied by a standard series of symptoms. What are they?

What will be an ideal response?


Following are some of the symptoms associated with price floors: A surplus develops as sellers cannot find enough buyers. Where goods, rather than services, are involved, the surplus creates a problem of disposal. To get around the regulations, sellers may offer discounts in disguised—andoften unwanted—forms.Regulations that keep prices artificially high encourage overinvestment in the industry. Even inefficient businesses whose high operating costs would doom them in an unrestricted market can survive beneath the shelter of a generous price floor.

Economics

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Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded ________

A) equals potential GDP B) equals full-employment GDP C) does not equal full-employment GDP D) equals the quantity of real GDP supplied

Economics

For an addictive drug such as heroin, if the price of heroin increases, then

A) the quantity demanded never changes. B) the quantity demanded will decrease by a relatively large amount. C) the quantity demanded will actually increase. D) the quantity demanded will decrease by a relatively small amount.

Economics

Because of differences in culture and language, it is not surprising that:

A) Eurozone nations are opposed in theory to the currency union but accept it in practice. B) Eurozone nations tend to be more homogeneous than states in the United States. C) demand shocks tend to be symmetric, whereas supply shocks are asymmetric. D) the year-to-year flow of people between states in the United States is larger than the same flow between member nations in the Eurozone.

Economics

If the federal government replaced the current income tax with a national sales tax, the price of:

A. corporate bonds would fall while the price of municipal bonds would rise. B. corporate bonds and municipal bonds would rise. C. municipal bonds would fall while the price of corporate bonds would rise. D. municipal bonds would rise and corporate bonds would not change.

Economics