Which of the following is an example of price floor ?
Correct answer: A. the minimum wage
- A. the minimum wage
- B. rent controls
- C. restricting petrol prices to Rs100 per litre when the equilibrium price is Rs150 per litre
- D. All of these answers are price floors
Explanation
A price floor is a legal minimum price, and the minimum wage is a minimum price for labour. Rent controls are price ceilings, while limiting petrol to Rs100 below its Rs150 equilibrium price is also a price ceiling.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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