Suppose a Price Ceiling Is Imposed Below the Undistorted Market

question 4

Multiple Choice

Suppose a price ceiling is imposed below the undistorted market equilibrium price.Which of the following is true?

• A)The increase in the real price paid by consumers is larger the more price inelastic consumer demand is.
• B)The increase in the real price paid by consumers is larger the more price inelastic the supply curve is.
• C)The size of the reduction in market output depends only on the price elasticity of supply and not the price elasticity of demand.
• D)Both (a) and (b).
• E)Both (a) and (c).
• F)Both (b) and (c).
• G)All of the above.
• H)None of the above.

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