A Maximum Legal Price That May Be Charged for a Particular

question 176

Multiple Choice

A maximum legal price that may be charged for a particular good or service is known as a

• A) price floor.
• B) price ceiling.
• C) black market.
• D) price support.

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Definitions:

Market Equilibrium

A situation in which the quantity of a good or service supplied is equal to the quantity demanded, leading to no pressure for price to change.

Price Controls

Government-imposed limits on the prices charged for goods and services in a market, aiming to maintain affordability and prevent inflation.

Consumer Surplus

The difference between the maximum price consumers are willing to pay for a good or service and the actual price they pay, representing the benefit obtained by consumers in the transaction.

Market Price

The current price at which an asset or service can be bought or sold; determined by supply and demand.