Suppose a Price Ceiling Is Currently Set Below the Equilibrium

question 372

Multiple Choice

Suppose a price ceiling is currently set below the equilibrium price. Now suppose that policy makers decide to lower the price ceiling. This reduction in the price ceiling will cause which of the following to occur?

• A) The shortage in the market will decrease.
• B) The shortage in the market will increase.
• C) The surplus in the market will decrease.
• D) The surplus in the market will increase.

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Definitions:

Validity

The extent to which a concept, conclusion or measurement is well-founded and likely corresponds accurately to the real world.

Debrief

The process of providing a detailed and explanatory feedback or information following a task, experiment, or event.

Psychological Information

Data related to the mental processes, behaviors, and emotional state of an individual.

Causal Conclusions

Judgments about the existence or strength of a cause-and-effect relationship between two variables.