Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 6 - Part II - Supply, Demand, and Government Policies - Questions for Review - Page 129: 3

Answer

With intervention of price ceilings and price floors equilibrium cannot be met so surpluses and shortages arrive and the problem must be dealt with. Sellers can avoid shortages by rationing products if there is a surplus then sellers must try to appeal to the buyers to buy their products because price cannot be altered.

Work Step by Step

Understand how price ceilings and floors affect society and by what means sellers must react to sell their inventory. Simply start by identifying what kind of intervention it is ( floor or ceiling) then correspond this to shortage or surplus and finally recognize how to deal with this problem by either keeping inventory or better promoting the product.
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