1 If a set price attempts to keep prices higher than the equ

1. If a set price attempts to keep prices higher than the equilibrium price it is a:
A- price cieling
B- Price floor

2.if there is a greater quantity supplied than the quantity demaded ( an excess supply of a good or service) you are most likely dealing with:
A- price ceiling set below the equil. price
B- price floor set above equil. price

3. A price ceiling causes consumer surplus to:
A- increase
B- move to equilibrium

4. After a devasting hurricane, households try to secure loans to repair and rebuild. Other things equal, this would lead to a:
A- decrease in interest rates of home repair loans as the supply for those loans increased.
B- increase in interest rates of home repair loans as the demand for those loans increased.

Solution

Ans1) B is the correct option. Price floor. Price floor is the price set by Government to protect price being too low so it the minimum price set by the government for a product or a service.

Ans2) B is the correct option. price floor set above equil. price. When the quantity supplied is greater than quantity demanded there is excess supply of a good, meaning suppliers are ready to supply more at that particular price but consumers are not ready to buy the good. This happens when the price floor above the equilibrium is set

Ans3) A is the correct option. Increase. Consumer surplus is the area above the price and below the demand curve so it increase when price ceiling is imposed.

Ans4) B is the correct option. increase in interest rates of home repair loans as the demand for those loans increased. Since more people are demanding, demand increases and the supply remains constant.