minimum price for beef in 2008. If the market equilibrium price was below the government’s minimum price, then the government’s minimum price is an example of a
In an attempt to support beef farmers, the Japanese government raised the minimum
If the market
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Binding |
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Non-binding price floor. |
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Binding |
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Non-binding price ceiling. |
Classify the below scenarios as efficient, inefficient, or impossible:
- The Japanese government sets a minimum price for beef, resulting in a deviation from the market equilibrium.
- Canada and Japan specialize in the production of goods according to their
comparative advantages and then trade. - Canada’s overall production fell in 2020 due to widespread
unemployment caused by the pandemic. ] - The price of certain fresh fruits and vegetables in both Canada and Japan rose in March of last year as the pandemic made international trade in fresh fruits and vegetables difficult (assume no price controls).
Price floors are used by government to protest farmers and producers to ensure that market price level dose not fall below the price floor level set by the government which can result in non existence of the producers
Binding price floor is set above the market equilibrium price.
Non Binding price floor is set below the market equilibrium price
In an attempt to support beef farmers, the Japanese government raised the minimum price for beef in 2008.
This is case of price floor by the government
If the market equilibrium price was below the government’s minimum price, then the government’s minimum price is an example of a-
Option a that is binding price floor is correct
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