EBK PRINCIPLES OF MICROECONOMICS (SECON
EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 6, Problem 1QR
To determine

Explain whether the price ceiling cause shortage or surplus in the market.

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Explanation of Solution

Price ceiling is a situation that occurs when the government imposes price limits on how high the price of a product of goods and services. The price ceiling must be set below the market equilibrium and causes shortage in the market. An example of a binding price ceiling is rent control, which is caused in property owners who are not willing to supply rent controlled apartments but many individuals willing to rent them.

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