A student makes the following argument: A price floor reduces the amount of a product that consumers

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A student makes the following argument: “A price floor reduces the amount of a product that consumers buy because it keeps the price above the competitive market equilibrium. A price ceiling, though, increases the amount of a product that consumers buy because it keeps the price below the competitive market equilibrium.” Do you agree with the student’s reasoning? Use a demand and supply graph to illustrate your answer.

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Economics

ISBN: 978-0134738321

7th edition

Authors: R. Glenn Hubbard, Anthony Patrick O Brien

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