Economy, asked by Juniorgiawa1030, 1 year ago

Why does government fix the price of some commodities below the equilibrium price?

Answers

Answered by anuththarabashini52

Answer:

Explanation:

Price ceilings prevent a price from rising above a certain level. When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result. Price floors prevent a price from falling below a certain level.

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Why does the government fix the price of a commodity higher than the equilibrium price?