The Imposition of a Binding Price Ceiling on a Market

question 47

Multiple Choice

The imposition of a binding price ceiling on a market causes

• A)quantity demanded to be greater than quantity supplied.
• B)quantity demanded to be less than quantity supplied.
• C)quantity demanded to be equal to quantity supplied.
• D)the price of the good to be greater than its equilibrium price.

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Definitions:

Normative

Relating to principles or rules of what is considered right and wrong, often used in economics to express subjective or value-based judgments.

Other Things Equal

A principle in economic models known as ceteris paribus, which means holding all other variables constant to isolate the effect of one variable.

Variables

Elements, factors, or quantities that can change or have different values in a given situation or analysis.

Economic Decisions

The choices made by individuals, households, or organizations regarding the allocation of resources and the distribution of goods and services.