Asked by Sarah Boktor on May 06, 2024
Verified
An example of an ineffective price ceiling would be the government setting the maximum price of wheat at ________ per bushel when the market price is at $5.00 per bushel.
A) $2.25
B) $3.00
C) $4.75
D) $6.00
Price Ceiling
A government-imposed limit on how high a price can be charged on a product or service, intended to protect consumers from conditions that could make necessary goods unaffordable.
Maximum Price
A ceiling price set by an authority, above which the sale of a good or service is not allowed.
Market Price
The current price at which a good or service can be bought or sold in a given market.
- Explore the impact that price controls, including both ceilings and floors, have on the stability of market mechanisms.
Verified Answer
JO
Josphat OngamaMay 12, 2024
Final Answer :
D
Explanation :
A price ceiling is considered ineffective if it is set above the current market price, as it does not impact the market. In this case, setting the maximum price at $6.00 when the market price is $5.00 would not affect the market, making it ineffective.
Learning Objectives
- Explore the impact that price controls, including both ceilings and floors, have on the stability of market mechanisms.