Asked by Jhollo Redondo on Jun 05, 2024
Verified
In the graph shown above,if the government set a price ceiling of $18
A) the price would rise to the equilibrium price.
B) the price would fall to equilibrium price.
C) there would be a temporary shortage,then price would rise to equilibrium price.
D) there would be a permanent shortage,at least until the price ceiling was lifted.
Price Ceiling
A government-imposed limit on how high a price can be charged for a product or service, typically used to control costs for essential items like food and rent.
Equilibrium Price
The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, representing a state of market balance.
Shortage
A situation where demand exceeds supply, resulting in insufficient availability of a product or service.
- Analyze the impact of government-imposed price ceilings and price floors on market equilibrium.
Verified Answer
BR
breldy rodriguezJun 06, 2024
Final Answer :
D
Explanation :
A price ceiling set below the equilibrium price (in this case, $18) would result in a permanent shortage as long as the price ceiling remains in effect. This is because the price ceiling prevents the price from rising to the equilibrium level where supply equals demand, leading to a situation where the quantity demanded exceeds the quantity supplied.
Learning Objectives
- Analyze the impact of government-imposed price ceilings and price floors on market equilibrium.