Question

Venezuelans organize to overcome food shortages The government of Venezuela controls the price of food and there are shortages of​ milk, rice,​ coffee, pasta,​ sugar, corn flour and cooking oil. Eggs have disappeared from store shelves. ​Source: ​www.teleSURtv.net/english, November 27. 2015 The price controls described in the news clip are​ ______. A. price ceilings B. price floors

Answer 1

Answer: Option A

Explanation: The control described in the case is Price Ceilings. Price ceiling is a method used by the government to control the price of certain commodities and to protect the consumer from overpricing of necessary goods.

Under price ceiling method, government fix the price of the commodity below the equilibrium price leading to demand exceeding supply which further results in shortage.

In the given case, shortage is clearly evident hence we can say the control is price ceiling.