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- Subject
- Prices, Wages & Taxeseconomics-mcqs › prices-wages-taxes
- Published
- 30 May 2019
- Last updated
- 28 May 2026
Explanation
A binding price ceiling leads to a shortage because the price is set below the equilibrium level. While shortages exist initially, they tend to worsen over time as suppliers reduce quantity supplied or exit the market, making the shortage more significant in the long run compared to the short run.
More Prices, Wages & Taxes MCQs
Practice related questions from the same subject.
- 1.Which statement accurately describes how the tax burden is allocated?
- 2.When a tax is imposed on an essential product, who is most likely to bear the majority of the tax burden?
- 3.If a tax is imposed on buyers in a market, what is the effect on the distribution of the tax burden?
- 4.In the supply and demand framework, when a tax is imposed on sellers of a product, which curve shifts and in what direction?
- 5.Which type of employee is most likely to face greater challenges in securing employment following an increase in the minimum wage?
- 6.Which of the following illustrates a price floor in economic terms?
- 7.Who is more inclined to advocate for the implementation of a price floor in the market?
- 8.What does a price floor represent in market regulation?
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