Question

The price of a gallon of gasoline in bonland is? $3.20. however, just before the? election, the government decides to fix the price of gasoline at? $2.80 per gallon. this is an example of a? ________.

Answer 1

This is ab example of a price floor. It is price that set by the government as a minimum price that would be imposed on a product. This value should be higher than that of the equilibrium price to be effective. It is used in order to prevent the prices to be too low.