Consider the graph below. The market price is P1. Suppose the government by rule or regulations sets a regulated price of P2 or P3. A Binding Price Ceiling is a regulated price below the market price. A Non-Binding Price Ceiling is a regulated price above the market price. A Binding Price Floor is a regulated price above the market price. A Non-Biding Price Floor is a regulated price below the market price. Look at the image below. which of these choices are true? multiple answers are correct:  A law which says sellers cannot charge more than P3 is a non-binding price ceiling.        A law which says sellers cannot charge more than P3 is a binding price ceiling.        A law which says sellers cannot charge less than P3 is a non-binding price ceiling.        A law which says sellers cannot charge less than P3 is a binding price ceiliing.        A law which says sellers cannot charge more than P3 is a non-binding price floor.        A law which says sellers cannot charge more than P3 is a non-binding price floor.        A law which says sellers cannot charge less than P3 is a non-binding price floor.        A law which says sellers cannot charge less than P3 is a binding price floor.        A law which says sellers cannot charge more than P2 is a non-binding price ceiling.        A law which says sellers cannot charge more than P2 is a binding price ceiling.        A law which says sellers cannot charge less than P2 is a non-binding price ceiling.        A law which says sellers cannot charge less than P2 is a binding price ceiling.        A law which says sellers cannot charge more than P2 is a non-binding price floor.        A law which says sellers cannot charge more than P2 is a non-binding price floor.        A law which says sellers cannot charge less than P2 is a non-binding price floor.        A law which says sellers cannot charge less than P2 is a binding price floor.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question

Consider the graph below.

The market price is P1.

Suppose the government by rule or regulations sets a regulated price of P2 or P3.

A Binding Price Ceiling is a regulated price below the market price.

A Non-Binding Price Ceiling is a regulated price above the market price.

A Binding Price Floor is a regulated price above the market price.

A Non-Biding Price Floor is a regulated price below the market price.

Look at the image below. which of these choices are true? multiple answers are correct: 

A law which says sellers cannot charge more than P3 is a non-binding price ceiling.
 
 
  
A law which says sellers cannot charge more than P3 is a binding price ceiling.
 
 
  
A law which says sellers cannot charge less than P3 is a non-binding price ceiling.
 
 
  
A law which says sellers cannot charge less than P3 is a binding price ceiliing.
 
 
  
A law which says sellers cannot charge more than P3 is a non-binding price floor.
 
 
  
A law which says sellers cannot charge more than P3 is a non-binding price floor.
 
 
  
A law which says sellers cannot charge less than P3 is a non-binding price floor.
 
 
  
A law which says sellers cannot charge less than P3 is a binding price floor.
 
 
  
A law which says sellers cannot charge more than P2 is a non-binding price ceiling.
 
 
  
A law which says sellers cannot charge more than P2 is a binding price ceiling.
 
 
  
A law which says sellers cannot charge less than P2 is a non-binding price ceiling.
 
 
  
A law which says sellers cannot charge less than P2 is a binding price ceiling.
 
 
  
A law which says sellers cannot charge more than P2 is a non-binding price floor.
 
 
  
A law which says sellers cannot charge more than P2 is a non-binding price floor.
 
 
  
A law which says sellers cannot charge less than P2 is a non-binding price floor.
 
 
  
A law which says sellers cannot charge less than P2 is a binding price floor.
Market
S1
P2
Starting
Equilibrium
P1
P3
D1
Q1
P.
Transcribed Image Text:Market S1 P2 Starting Equilibrium P1 P3 D1 Q1 P.
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