Which Statement Illustrates What an Effective Price Ceiling Does to a Market

question 4

Multiple Choice

Which statement illustrates what an effective price ceiling does to a market price?

• A) Like a helium balloon bumps against a room ceiling, unable to rise to the level to which it would go if it were outside, price ceilings hold prices down below equilibrium.
• B) Painting a ceiling white can make it appear higher than it actually is. Price ceilings make a price appear higher than it actually is.
• C) Something attached to the ceiling is higher than it would be if it were set on the floor. Setting a price ceiling makes a price higher than it would be in a free market.
• D) Just like a roof can leak in different places, price ceilings can leak; a market with price ceilings can end up with many different prices at once.

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Definitions:

Primary Drives

Basic, innate drives that motivate behavior essential for survival, such as hunger, thirst, and avoidance of pain.

Hull

An American psychologist who developed the drive-reduction theory, emphasizing the role of biological needs in motivation and behavior.

Stimulus-Response

The basic concept that a specific stimulus will elicit a specific, predictable response in an organism.

Associative

Relating to or involving connections between ideas, feelings, memories, or experiences.