Class 12th Economics - Market Equilibrium Case Study Questions and Answers 2022 - 2023
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Market Equilibrium Case Study Questions With Answer Key
12th Standard CBSE
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Reg.No. :
Economics
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We commonly come across instances where government fixes a maximum allowable price for certain goods.
The government imposed upper limit on the price of a good or service is called 'price ceiling'. It is imposed on generally necessary items like wheat, rice, sugar etc. It is fixed below the market-determined price, as at the market determined price some section of the population will not be able to afford these goods.
The government imposed lower limit on the price that may be charged for a particular good/service is called 'Price floor'. Some popular examples of imposition of price floor are agricultural price support programmes and the minimum wage legislation. Through the 'agricultural price-support programme' the floor is normally set at a level higher than the market-determined price for these goods. Similarly through the 'Minimum Wage Legislation' the government ensures that the minimum wage rate is set above the equilibrium wage rate.
(a) Give another name for 'market-determined price'?
(b) Explain the concept of 'price-ceiling'.
(c) Throw light on the concept of 'Price-floor' with suitable examples.(a)
Case Study
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Answers
Market Equilibrium Case Study Questions With Answer Key Answer Keys
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(a) It is also known as the 'equilibrium price'.
(b) The government imposed upper limit on the price of a good or service is called 'price ceiling'. It is generally imposed on necessary items like wheat, rice, sugar etc. It is also fixed below the market-determined price as some sections of the population will not be able to afford these goods at the market-determined price.
(c) The government imposed lower limit on the price that may be charged for a particular good/service is called 'Price floor'. Some of the popular examples of imposition of price floor are' Agricultural Price Support-Programmes' and the 'Minimum Wage Legislation'. Through the Agricultural Price-Support Programme the floor is normally set a level higher than the market determined price for these goods. Similarly, through the 'Minimum Wage Legislation', the government ensures that the Minimum Wage Rate is set above the equilibrium wage rate.
