The fixing of the price of an item above or below the equilibrium price is most likely to take place in a?

  • A centrally planned economy
  • B free market economy
  • C developed economy
  • D mixed economy

The correct answer is B. free market economy

In a free-market economy, the concept of price ceiling and price floor come to play. In this kind of market situation, the government can introduce laws to ensure that prices do not rise or fall beyond a particular amount.

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