Question

How do Government price ceilings and price floors affect the economy? Select all that apply.
A: They Cause shortages and surpluses
B:They guarantee that sellers receive a minimum reward for their efforts.
C: They keep essential goods from becoming too expensive
D: They prevent shortages ad surpluses.
E: They Promote market equilibrium.

Answer 1

The following options are correct: A, B AND C.
Price ceiling and price floor are two price control methods which the government used to control price. Price ceiling is used to prevent prices from been too low while price floor is lowest price a commodity can be sold for .