Question

a price floor is established by government if it feels a price is ___? (keeps it higher)
too high
too low
not under its control
what action creates a shortage? *
price floor
price ceiling
what do sole proprietorships have? *
limited liability
unlimited liability

Explanation:

1. A price - floor is a minimum price set by the government. It is established when the government thinks the price is too low and wants to keep it higher.
2. A price ceiling is a maximum price. When it is set below the equilibrium price, it creates a shortage as quantity demanded exceeds quantity supplied.
3. Sole proprietorships have unlimited liability, meaning the owner is personally responsible for all business debts and obligations.

Answer:

1. B. too low
2. B. price ceiling
3. B. unlimited liability