Asked by Reyna Nava Sanchez on May 06, 2024
Verified
An example of a ________ would be the government setting the price of coffee below the equilibrium price.
A) non-income tax
B) rational expenditure
C) black market
D) price ceiling
Price Ceiling
A government-imposed limit on how high a price can be charged for a product.
Equilibrium Price
The market price at which the quantity of goods supplied equals the quantity of goods demanded.
- Learn the ideas surrounding price ceilings and price floors, focusing on how they affect the equilibrium within markets.
- Explain the concept of illegal markets (black markets) and their relation to price controls.
Verified Answer
LE
Loubens EtienneMay 12, 2024
Final Answer :
D
Explanation :
A price ceiling is a government-imposed limit on how high a price can be charged on a product, in this case, coffee. Setting the price below the equilibrium price creates a price ceiling, which can lead to shortages as the demand exceeds the supply at that price point.
Learning Objectives
- Learn the ideas surrounding price ceilings and price floors, focusing on how they affect the equilibrium within markets.
- Explain the concept of illegal markets (black markets) and their relation to price controls.
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