Using Fig. B, determine what will be the result of a price ceiling at P=10? (a) surplus of 8 (b) shortage of 4 (c) shortage of 12 (d) surplus of 12 (e) shortage of 8
Using Fig. B, determine what will be the result of a price ceiling at P=10? (a) surplus of 8 (b) shortage of 4 (c) shortage of 12 (d) surplus of 12 (e) shortage of 8
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Using Fig. B, determine what will be the result of a
(a) surplus of 8 |
||
(b) shortage of 4 |
||
(c) shortage of 12 |
||
(d) surplus of 12 |
||
(e) shortage of 8 |
Expert Solution
Step 1
Price ceiling is the maximum legal price that can be charged for a good or service in the market. A binding price ceiling is set below the equilibrium price. Any price ceiling above the equilibrium level is inefficient.
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