FIGURE 5-1
-Refer to Figure 5-1. In this market, suppose the government announces that the price must be P 2 or higher. This price P2) is referred to as
A) a price ceiling.
B) a price floor.
C) a non-binding price floor.
D) a binding price ceiling.
E) an equilibrium price.

Question

FIGURE 5-1
-Refer to Figure 5-1. In this market, suppose the government announces that the price must be P 2 or higher. This price P2) is referred to as
A) a price ceiling. 
B) a price floor. 
C) a non-binding price floor. 
D) a binding price ceiling. 
E) an equilibrium price.

Quizplus · Accepted Answer

A price floor is a minimum price set by the government, and if the price must be P2 or higher, it indicates a price floor.

FIGURE 5-1 -Refer to Figure 5-1. in This Market, Suppose the Government