Question

1) Price floors are typically accompanied by a standard series of symptoms. What are they?

2)Consider the various ways that firms, households, and governments participate in the economy.

(a) How are firms consumers?

(b) How are households producers?

(c) How are governments consumers OR producers?

Answer 1

The symptoms are increased supply, shortage of demand, glut in market, imposition of tariffs to keep prices high, surplus commodities like rice with govt as it purchases surplus supply at price floor to keep prices constant. This also leds to storage problems, exploitation of consumers etc

2 Firms consume labour services (rawmaterials also), and infrastructure services provided by govt

3 households produce labour services, managerial services etc

C govt consume private goods like stationary, furniture provided by private companies. As a producer it supplies infrastructure, service like law and order,. It also produces some goods in public enterprises