Which of the following is an example of a price floor ? A. Safeway charges $1 more than Fred Meyer charges for a 5 pound bag of sugar. B. The lowest price of gasoline this year was $2 per gallon. C. The government guarantees that potato farmers will receive at least $50 a ton. D. Stock prices hit a floor last week.

Question

Teagan Spencer

Business

20 June, 06:43

Which of the following is an example of a price floor ? A. Safeway charges $1 more than Fred Meyer charges for a 5 pound bag of sugar. B. The lowest price of gasoline this year was $2 per gallon. C. The government guarantees that potato farmers will receive at least $50 a ton. D. Stock prices hit a floor last week.

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Answers (1)

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Diya · Answer 1

C. The government guarantees that potato farmers will receive at least $50 a ton.

Explanation:

Price floor is implemented by the government or a group where price control is imposed or limit is placed on how low a price a product can be sold.

For price floor to be effective it must be higher than the equillibrum price.

Equillibrum price is the price at which quantity consumers are willing to pay for is equal to quantity suppliers re willing to sell.

Price floors are usually used to keep commodity prices from going too low.

So if the government guarantees farmers will receive at least $50 per ton of potato, they are setting a price floor of $50.