Arrange the following statement of government intervention in the form of price control.
(A) The government sets floors or minimum prices for these goods and services.
(B) A fall in price below a particular level is not desirable.
(C) The price charged for a particular good or service is called the price floor.
(D) The government imposed a lower limit on the price.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (B), (A), (D), (C)
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(B) — A fall in price below a particular level is not desirable. This sets the context — the government wants to prevent prices from falling too low.
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(A) — The government sets floors or minimum prices for these goods and services. As a corrective measure, the government introduces a minimum price policy.
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(D) — The government imposed a lower limit on the price. This describes the implementation of the policy — a price floor is established below which prices cannot fall.
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(C) — The price charged for a particular good or service is called the price floor. Finally, this defines what such a government-fixed minimum price is — the price floor.