Which statement(s) is TRUE?
I. Price floors are legally established minimum prices for goods and services.
II. Price floors create surpluses, whereas price ceilings create shortages.
III. Price floors reduce quality of goods and services.

Question

Quizplus · Accepted Answer

Statement I is true, as price floors are indeed legally established minimum prices for goods and services.
Statement II is also true, as price floors create surpluses by preventing prices from falling to the market equilibrium level, while price ceilings create shortages by preventing prices from rising to the market equilibrium level.
Statement III is false, as price floors do not necessarily reduce the quality of goods and services, but they may cause inefficiencies by generating surpluses.

Which Statement(s) Is TRUE