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Choose the correct answer for the below question:

A government will create a surplus in a market when it:

A. Sets a price ceiling above the equilibrium price
B. Sets a price floor above the equilibrium price
C. Sets a price floor below the equilibrium price
D. Sets a price ceiling below the equilibrium price

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Richa Arora
Richa AroraLv10
13 Sep 2020

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Related questions

If a nation exports a product, then the price of that product in the nation:

A. Will rise above the domestic (no-trade) equilibrium price
B. Will fall below the domestic (no-trade) equilibrium price
C. Will remain the same as the domestic (no-trade) equilibrium price
D. May either rise or fall, depending on the product

A black market could arise as a result of:

a. An increase in demand
b. A decrease in supply
c. The imposition of a legal price floor above the equilibrium price
d. The imposition of a legal price ceiling below the equilibrium price

If a price ceiling is to be effective, it should be set

 

a. Below the equilibrium price, and it will create a market surplus.

b. Below the equilibrium price, and it will create a market shortage.

c. Above the equilibrium price, and it will create a market shortage.

d. Above the equilibrium price, and it will create a market surplus.

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