To Say That a Price Ceiling Is Binding Is to Say

question 88

Multiple Choice

To say that a price ceiling is binding is to say that the price ceiling

• A)results in a surplus.
• B)is set above the equilibrium price.
• C)causes quantity demanded to exceed quantity supplied.
• D)All of the above are correct.

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Definitions:

Short Run

In economics, a period in which at least one factor of production is fixed, allowing for limited adjustments to changes in demand or supply.

Long Run

A period in economics where all resources and inputs can be fully adjusted or changed, contrasting with the short run where some are fixed.

Marginal Revenue

The revenue uplift experienced by selling an additional unit of a product or service.

Marginal Cost

The additional expense incurred from producing one more unit of a good or service, which is crucial for decision-making in production and pricing.