If a Good Is Subject to a Binding Price Ceiling

question 93

Multiple Choice

If a good is subject to a binding price ceiling and Anna purchases it on the black market,what can she expect to happen to the availability of the good over time?

• A) The availability of the good will rise over time as the supply curve becomes more elastic and the demand curve becomes more inelastic.(The shortage of the good will fall. )
• B) The availability of the good will fall over time as both the supply and demand curves become more elastic.(The shortage of the good will fall. )
• C) The availability of the good will fall over time as both the supply and demand curves become more elastic.(The shortage of the good will rise. )
• D) The availability of the good will rise over time as the demand curve becomes more elastic and the supply curve becomes more inelastic.(The shortage of the good will fall. )
• E) The availability of the good will not change over time.

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Definitions:

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded.

Quantity Demanded

The total amount of a good or service that consumers are willing to buy at a given price over a specified period.

Economists

Economists are experts who study how societies use scarce resources to produce valuable commodities and distribute them among different people.

Demand Curve

A graphical representation that shows the relationship between the price of a good or service and the quantity demanded by consumers at various prices, typically downward sloping.