When a Price Ceiling Is Imposed in a Competitive Market

question 61

Multiple Choice

When a price ceiling is imposed in a competitive market at a level below the equilibrium price:

• A)the gain to producers outweighs the loss to consumers.
• B)the output level becomes inefficient.
• C)the total surplus in the market is not affected.
• D)the producer surplus is increased.

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Definitions:

Frugality

The quality of being economical with resources or expenditure; practicing restraint in the use of materials and funds.

Cognitive Dissonance

A psychological state of discomfort arising from holding two or more conflicting beliefs, values, or attitudes, leading to behavior change or attitude adjustment.

Consistency

is the tendency to maintain a uniform behavior, attitude, or belief over time.

Cognitions

Mental processes involved in gaining knowledge and comprehension, including thinking, knowing, remembering, judging, and problem-solving.