Administered prices are prices set or regulated by the government rather than determined by market forces.
Price ceiling (maximum price) and price floor (minimum price) are both forms of government intervention in the market, making them administered prices.
Understanding the options:
Price ceiling ✅ (Correct)
A maximum price set below equilibrium (e.g., rent control, essential commodities).
It prevents prices from rising too high and can lead to shortages.
Price floor ✅ (Correct)
A minimum price set above equilibrium (e.g., Minimum Support Price for farmers, minimum wage).
It prevents prices from falling too low and can lead to surpluses.
