Asked by VALERIA BARDALES on May 21, 2024
Verified
When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.
Binding Price Floor
A government or regulatory-imposed price control set above the equilibrium price, which prevents the market price from falling below that level.
Potential Sellers
Potential sellers are individuals or entities that may be willing to sell goods or services under the right conditions.
- Attain an understanding of the concept of price floors, exploring their bases and effects within market structures.
- Examine the consequences of implementing binding price floors along with their allocation methods.
Verified Answer
CW
Candace WilliamsMay 23, 2024
Final Answer :
True
Explanation :
A binding price floor is set above the equilibrium price, leading to a surplus of the good because the quantity supplied exceeds the quantity demanded at that price. As a result, some sellers cannot find buyers.
Learning Objectives
- Attain an understanding of the concept of price floors, exploring their bases and effects within market structures.
- Examine the consequences of implementing binding price floors along with their allocation methods.