Answered: An increase in an effective price…

An increase in an effective price ceiling will do what in the relevant market? a. The surplus will increase.b. The surplus will decrease.c. The shortage will increase.d. The shortage will decrease.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section6.1: Controls On Prices

Problem 1QQ

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Question

An increase in an effective price ceiling will do what in the relevant market?

a. The surplus will increase.
b. The surplus will decrease.
c. The shortage will increase.
d. The shortage will decrease.

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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