A binding price ceiling will a. result in a product shortage. b. result in a product surplus. c. induce new firms to enter the industry. d. clear the market.
A binding price ceiling will a. result in a product shortage. b. result in a product surplus. c. induce new firms to enter the industry. d. clear the market.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter4: Labor And Financial Markets
Section: Chapter Questions
Problem 12SCQ: Select the correct answer. A price ceiling will usually shift: demand supply both neither
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Question
A binding
a. result in a product shortage.
b. result in a product surplus.
c. induce new firms to enter the industry.
d. clear the market.
Expert Solution
Step 1
The price ceiling refers to a maximum-price that can be charged on a good service in the market, which is fixed by the government. A binding price ceiling happens when the government sets a required price on a good at a price below equilibrium, which foils an increase in the price of that good or service above the binding level.
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