Final answer:
A price floor, when set above the equilibrium, causes a surplus without moving the demand or supply curves. Conversely, a price ceiling causes a shortage when set below the equilibrium, also without shifting the curves. Aggregate operations planners focus on balancing capacity and demand.
Step-by-step explanation:
Understanding Price Floors and Price Ceilings in Economics :
A price floor is a minimum price set by the government that must be paid for a good or service. Introducing a price floor does not shift the demand or supply curves; rather, it simply sets a lower boundary for the price that can be charged for a good or service. If a price floor is set above the equilibrium price, it can lead to a surplus where supply exceeds demand. In this situation, suppliers are willing to sell more at the higher price, but consumers do not want to buy as much at that price. In contrast, a price ceiling is a maximum price that can be legally charged for a good or service. Much like the price floor, the imposition of a price ceiling does not move the demand or supply curves. Instead, a price ceiling set below the equilibrium price causes a shortage, where there is more demand than there is supply at the capped price.
To answer the student's original question regarding aggregate operations, the correct answer is C) capacity and demand. Aggregate operations planners balance capacity (the total level that production facilities can operate) and demand (the amount of product that is wanted by buyers).