When a Binding Price Ceiling Is Imposed on a Market

question 105

Multiple Choice

When a binding price ceiling is imposed on a market to benefit buyers,

• A)every buyer in the market benefits.
• B)every buyer and seller in the market benefits.
• C)every buyer who wants to buy the good will be able to do so,but only if he waits in long lines.
• D)some buyers will not be able to buy any amount of the good.

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Definitions:

Marginal Propensity

The ratio of the change in an economic variable, such as consumption or saving, to the change in another, typically income.

Disposable Income

The net financial position of households for spending and saving, after accounting for income taxes.

Consumption

Consumption encompasses the acquisition and use of goods and services by households to satisfy their needs and wants.

Induced Consumption

Consumer spending that is influenced by changes in income, differentiating from autonomous consumption which does not vary with income.