When discussing price floors and price ceilings, it’s essential to understand their definitions and implications in the market.
- A. Ineffective price floors tend to be too high: This statement is not typically accurate. An ineffective price floor is usually set below the market equilibrium price, meaning it has no impact on the market.
- B. Ineffective price ceilings tend to be too low: This statement is correct. An ineffective price ceiling is set above the equilibrium price, allowing the market to function freely.
- C. Price floors help producers by raising prices: This statement is also true. Price floors are established to ensure that prices don’t fall below a certain level, helping producers receive a minimum income.
- D. Price ceilings: This statement seems incomplete. However, in general, price ceilings are aimed at keeping prices from rising too high, thus protecting consumers, but an effective discussion requires further elaboration.
In summary, when evaluating these statements, options B and C accurately reflect the effects of price ceilings and price floors in markets.