Please explain the rationale behind fixing the price ceiling below the equilibrium price and floor price above the equilibrium price.
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If the market price is above the equilibrium price, the quantity supplied will be greater than the demand hence creating surplus. The rationale behind this is consumer protection through price control.
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Answer:
On this graph, the top horizontal line represents
a price floor set above equilibrium.
a price floor set below equilibrium.
a price ceiling set above equilibrium.
a price ceiling set below equilibrium.
Explanation:
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