Suppose the government sets a price floor of $10. It means that the government:
A) wants to prevent market price from rising above $10.
B) wants to prevent market price from falling below $10.
C) has no intentions to intervene in the market.
D) wants a market to determine the market price.

Question

Quizplus · Accepted Answer

A price floor is a government-imposed minimum price that cannot be legally undercut. Therefore, the government sets a minimum price level and wants to prevent market price from falling below that level.

Suppose the Government Sets a Price Floor of $10