Question

When the government sets a price for wheat that is above the equilibrium price, it is imposing a _____.

Answer 1

When the government sets a price for wheat that is above the equilibrium price, it is imposing a price floor

Answer 2

Answer;

Price floor

When the government sets a price for wheat that is above the equilibrium price, it is imposing a price floor.

Explanation;

• Price floors prevent a price from falling below a certain level. When a price floor is set above the equilibrium price, quantity supplied will exceed quantity demanded, and excess supply.

• Price control occurs when the government laws regulate prices instead of letting market forces determine prices.

• Price ceilings prevent a price from rising above a certain level.