The Government Decides to Impose a Price Ceiling on a Good

question 128

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 it imposes the price ceiling above the equilibrium price:

• A) consumers will respond to the higher price and therefore wish to purchase less of the good than at the equilibrium price.
• B) producers will respond to the higher price and therefore offer fewer units for sale.
• C) consumers will purchase less of the good after the price ceiling is imposed.
• D) neither producers nor consumers will change their behaviour.

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Definitions:

Liquidation

The process of closing a business and distributing its assets to claimants, often during bankruptcy.

Bankruptcy Code

The body of federal law governing the process of bankruptcy in the United States, allowing individuals or entities to eliminate or reorganize debt.

Chapter 13 Bankruptcy

A type of bankruptcy that allows individuals to undergo a financial reorganization supervised by a federal court, enabling them to repay their debts over a set period.

Voluntary

Done, given, or acting of one's own free will without coercion or obligation.