When a Price Ceiling Is in Effect

question 8

Multiple Choice

When a price ceiling is in effect:

• A) suppliers get too strong a signal from demanders about their needs.
• B) demanders have no incentive to signal their needs to suppliers.
• C) all of demanders' needs are met at the lower price, so there is no need to signal anything to suppliers.
• D) demanders cannot signal their needs to suppliers.

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Definitions:

Critical Value

A threshold in hypothesis testing, which the test statistic must exceed to reject the null hypothesis.

Level of Significance

A threshold in hypothesis testing, below which the null hypothesis is rejected, commonly set at values like 0.05 or 0.01.

Critical Value

A critical value is a point on the scale of the test statistic beyond which we reject the null hypothesis, used in significance testing.

Null Hypothesis

A statement used in statistics that suggests there is no effect or no difference, and any observed variance is due to chance.