The Government Decides to Impose a Price Ceiling on a Good

question 71

Multiple Choice

The government decides to impose a price ceiling on a good because it thinks that the market-determined price is too high.If the government imposes the price ceiling below the equilibrium price:

• A) consumers will respond to the lower price and wish to purchase more of the good than at the equilibrium price.
• B) producers will respond to the lower price and offer more units for sale.
• C) consumers will be able to purchase more of the good after the price ceiling is imposed.
• D) it will not be binding.

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Definitions:

C Corporations

A type of corporation in the U.S. that is taxed separately from its owners.

Proprietorship

A business owned and run by one individual where there is no legal distinction between the owner and the business.

Taxed

Subjected to a financial charge or levy imposed by a government on income, transactions, or property.

Partnership

A partnership is a legal form of business operation between two or more individuals who share management and profits.