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23 June, 08:48

A government-imposed price of $12 in this market is an example of a

a. Non-binding price ceiling that creates a shortage.

b. Binding price ceiling that creates a shortage.

c. Binding price floor that creates a surplus.

d. Non-binding price floor that creates a surplus.

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  1. 23 June, 09:13
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    Answer. C Binding price floor that creates a surplus

    Explanation: A government imposed price of $12 in this market is an example of a binding price floor that creates a surplus as the government has fixed the price of the goods as $12 due to which the floor price is fixed and the surplus is created as the price is too high that the demand of the goods decreases. This intervention by the government is to create surplus by binding the floor price.
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