Which of the following describes a difference between a price support and a price ceiling?
A) A price support creates a deadweight loss while a price ceiling does not.
B) A price ceiling is a regulated price while a price support is a regulated quantity.
C) A price support decreases the quantity while a price ceiling does not.
D) A price ceiling increases the price above the equilibrium price while a price support does not.
E) A price support attempts to raise the price above the equilibrium price while a price ceiling does not.

Question

Quizplus · Accepted Answer

A price support is a government intervention to maintain the price of a good at a certain level, typically above the equilibrium price, to benefit producers. A price ceiling, on the other hand, is a maximum price set by the government below the equilibrium price to make goods more affordable to consumers. Therefore, E accurately describes a difference between the two: a price support aims to raise the price above equilibrium to benefit producers, while a price ceiling is set to prevent prices from going above a certain level to protect consumers.

Which of the Following Describes a Difference Between a Price