Suppose the state government decided that bagel sellers are integral to the state economy and...
Question:
Suppose the state government decided that bagel sellers are integral to the state economy and decided to set a price floor for bagels. For the price floor to be effective, what must be true? Describe the inefficiency of this policy if the price floor is effective.
Price Floors
Price floors are called as such as they set the minimum price that must be paid to a supplier. These are put in place where a supplier can not sustain themself at the equilibrium price.
Answer and Explanation: 1
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View this answerFor the floor price to be effective, it must be above the equilibrium price in the market or the bagel sellers will actually be harmed by the price...
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Price Floor in Economics: Definition & Examples
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Chapter 3 / Lesson 55
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Explore price floors in economics. Learn the definition of a price floor and understand why it is set. Discover the effects of price floors with examples.
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