Which of the Following Is True of Price Ceilings

question 56

Multiple Choice

Which of the following is true of price ceilings?

• A) Firms must charge the price established as a price ceiling.
• B) A ceiling price below the free- market equilibrium price is not binding.
• C) If the ceiling price is set above the free- market equilibrium price it will have no effect on the market.
• D) With a non- binding ceiling price an excess demand for the product will develop.
• E) With a binding ceiling price a surplus of the commodity will develop.

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