ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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setting an equilibrium point
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setting a minimum price
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setting a price ceiling
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setting a price floor
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Detailed explanation-1: -Therefore, the correct option is b, price ceilings cause goods to be rationed by some other means than legally determined market prices.
Detailed explanation-2: -Price ceilings lead to a decline in the number of market transactions because when the prices are set below the equilibrium level, there is a shortage emanating from a fall in quantity supplied and an increase in quantity demanded.
Detailed explanation-3: -Definition: Price ceiling is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply.
Detailed explanation-4: -A price ceiling above the competitive equilibrium price will result in a surplus. A price ceiling below the competitive equilibrium price will result in a shortage.