Which Statement About Price Ceilings Is Correct

question 49

Multiple Choice

Which statement about price ceilings is correct?

• A) Whether a price ceiling is placed below or above the equilibrium price, it will always cause deadweight loss.
• B) A price ceiling will only cause deadweight loss if it is placed above the equilibrium price.
• C) A price ceiling will only cause deadweight loss if it is placed below the equilibrium price.
• D) Whether a price ceiling is placed below or above the equilibrium price, it will always cause a shortage of the good.

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Definitions:

Economies

Broad systems involving the production, distribution, and consumption of goods and services within a society.

Marginal Revenue

The increased earnings a business obtains from the sale of one extra unit of goods or services.

Maximizing Profits

The process by which a firm adjusts its production to achieve the highest possible profit.

Metropolitan Opera

A leading American opera company based in New York City, known for its live performances and international broadcasts.