A Price Ceiling of $8 Placed on the Market in the Graph

question 101

Multiple Choice

A price ceiling of $8 placed on the market in the graph shown:

• A) is non-binding, and does not affect the market.
• B) is binding, and causes a shortage.
• C) is binding, and causes a surplus.
• D) is non-binding, and does not prevent the market from reaching equilibrium.

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