An effective price ceiling in the market for good X will result in: (a) a persistent glut of good X b) a persistent shortage of good X c) A fall in demand for Z which is a complementary good of X d) A shift to the right of the supply of X

An effective price ceiling in the market for good X will result in: (a) a persistent glut of good X b) a persistent shortage of good X c) A fall in demand for Z which is a complementary good of X d) A shift to the right of the supply of X

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter3: Supply And Demand: Theory

Section: Chapter Questions

Problem 7QP

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Question

An effective price ceiling in the market for good X will result in:
(a) a persistent glut of good X
b) a persistent shortage of good X
c) A fall in demand for Z which is a complementary good of X
d) A shift to the right of the supply of X
For each of the alternatives, argue which is true, false or uncertain and why.

Video Definition Video Definition Government regulation setting a maximum price a business may charge for a given good or service. A price ceiling itself does not cause demand or supply to change. It is simply a mechanism used to set a price that can be legally charged in the market. Price ceilings are often implemented during times of crisis to avoid price gouging.

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