Suppose the Market Supply Is Initially at S1 and a Price

question 117

Multiple Choice

Suppose the market supply is initially at S1 and a price ceiling is set at 8. If supply shifts from S1 to S2, then

• A) The price ceiling will no longer bind.
• B) The price ceiling will prevent output from changing.
• C) The size of the shortage will increase.
• D) The market will not reach equilibrium.

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