Question

The demand for corn has increased in May without any change in supply. Eight months later there still has been no change in corn prices. This is an example of a

a. price floor.
b. sticky price.
c. macroeconomic price.
d. price control.

Answer 1

Answer: d. price control.

Explanation:

Price control is a mechanism used by government in order to control price, this is done when government sets a minimum and maximum price for certain goods and services, this is done in order to manage the purchasing power for such goods. Most times government adopt price control system for things like food, energy product, etc. Price control can lead to a situation where there will either be shortage or over supply.

Answer 2

Answer:

Sticky price

Explanation:

Sticky price is when the market prices of goods , services and security refuse to change in reaction to changes in some economic factors despite shift in the demand and supply curve.

It finds it easier to move in one direction in a particular situation.

So also it does not respond to change in the cost of production.

Cost related to price changes , long term binding contracts some factors responsible for stick price