Question

Which of the following is FALSE regarding Price Controls? Select one: a. There are two types of price controls, Price Ceilings and Price Floors b. The market price for price controls are set by the government c. Price controls may have no impact on the market d. A price control is a guideline for the market price, but firms can still charge whatever they want e. Price controls may result in a surplus or shortage

Answer 1

Answer= d. A price control is a guideline for the market price, but firms can still charge whatever they want

reason-

Price control can be binding or non Binding. Price floor below Equilibrium Price is non binding and price ceiling above equilibrium Price is non Binding.  

The firms have to follow the binding price controls. They cannot charge above binding price ceiling and below Binding price floor.

Price control is set by the government. There are two types of price controls- Price ceiling and price floor.

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