Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Q4.
Transcribed Image Text:QUESTION 4
What is the effect of a binding price ceiling on the quantity demanded of a product?
No change in demand
Demand will rise
Demand will fall
Supply will change in response to a change in demand
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Expert Solution
Step 1
A demand curve is a downward-sloping curve.
A supply curve is an upward-sloping curve.
A binding price ceiling is a legal or government-imposed price limit that is set below the market equilibrium price. This creates a situation where the price cannot adjust to balance supply and demand.
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