The graph below represents a simplified hypothetical version of the market for medical procedures in Canada.
If the market is allowed to set the
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P = $7,000, Q = 62 thousand |
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P = $12,000, Q = 106 thousand |
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P = $7,000, Q = 112 thousand |
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P = $49,000, Q = 62 thousand |
Binding price ceiling means that government sets prices below the market equilibrium price in order prevent upward revision of price from this binding price.
Binding price binds the market.
In this equilibrium price be where demand and supply intersects that is $ 12,000
Price below this equilibrium price be set at $7000
Price = $7000 be binding price ceiling
At this quantity demanded is 112 thousand units
Quantity supplied = 62 thousand units
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