Which of the following statements is true?
A) Price ceilings set below the equilibrium price cause shortages.
B) Surpluses result when a price floor is set above the equilibrium price.
C) Price ceililngs set above the equilibrium price cause surpluses.
D) Price ceilings are set by the market and price floors are set by the government.
E) a and b

Question

Which of the following statements is true?
A) Price ceilings set below the equilibrium price cause shortages.
B) Surpluses result when a price floor is set above the equilibrium price.
C) Price ceililngs set above the equilibrium price cause surpluses.
D) Price ceilings are set by the market and price floors are set by the government.
E) ​a and b

Quizplus · Accepted Answer

A) Price ceilings below equilibrium price limit how high prices can go, leading to demand exceeding supply, hence shortages. B) Price floors above equilibrium price prevent prices from falling to equilibrium levels, causing supply to exceed demand, hence surpluses. C) is incorrect because price ceilings above equilibrium don't affect the market; prices naturally won't go that high. D) is incorrect because both price ceilings and floors are typically set by the government, not the market.

Which of the Following Statements Is True