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Question
SHORT ANSWER
1. When market participants are allowed through their interactions to find the price, there will be equilibrium where the quantity supplied by buyers equals the quantity supplied by sellers. If this is the case, why does the government intervene in certain markets by imposing a price floor? Why does the government intervene in certain markets by imposing a price ceiling? Which market participant (the buyer or the seller) will lobby the government to secure passage of a binding price floor? Which one will lobby for a binding price ceiling?
Answer
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