22 January, 12:12

# Which of the following is an example of a binding price control? This is a "multiple answer" question, so there may be more than one correct answera. The price of steel is \$300 per ton. The government imposes a price floor of \$200 per ton.b. The price of cotton is \$10 per bale. The government imposes a price floor of \$15 per bale.c. The price of gasoline is \$2 per gallon. The government imposes a price ceiling of \$4 per gallon.d. The price of bananas is \$2 per pound. The government imposes a price ceiling at \$1 per pound.e. The price of wheat is \$20 per bushel. The government imposes a price floor of \$5 per bushelf. The price of mobile phone data is around \$15 per gigabyte per month. The government imposes a price ceiling of \$5 per month.

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1. 22 January, 15:29
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The correct answer is: option b, option d, option f.

Explanation:

Price control can be defined as the limit on the price set by the government. A price floor refers to the lower limit on the price of a product. A binding floor refers to the price floor which is set above the equilibrium price level.

A price ceiling refers to the upper limit fixed on the price of a product. A producer cannot charge more than this price. A binding price ceiling is fixed below the equilibrium level of the price.

The price floor of \$15 on cotton is binding as it is above the equilibrium level.

The price ceiling of \$1 per pond on bananas is binding as it is fixed below the equilibrium level.

The price ceiling of \$5 per month on mobile phone data is binding as it fixed below the equilibrium level.