Suppose that the market equilibrium price for a good is $1. A non-bonding price ceiling in this market will result in a price set at _____.
b. below $1
c. above $1
d. More information is needed to determine the answer.
In the marketplace, price control refers to the government intervention when it sets the market minimum or maximum price, irrespective of the market equilibrium. The government takes this action to protect the specific side, either demand or supply, of market participants and maintain their interest in making economic activities.
Answer and Explanation: 1
The correct option is: c. above $1
A price ceiling is the government-imposed maximum price of a good. It is the maximum price limit...
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fromChapter 2 / Lesson 8
Discover the definition of price ceiling and price floor in microeconomics, understand the difference between the two price controls, and explore examples and graphs of price ceilings and price floors.