What is a price ceiling?

Multiple choice question for Market. Select an option, then review the explanation below.

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A government-imposed limit on the highest price sellers can charge for a productThe gap between the original equilibrium price and the new equilibrium price following a drop in supplyA government-mandated minimum price that sellers are required to charge for a productThe lowest price that buyers are prepared to pay for a product

Explanation

A price ceiling is a regulatory maximum price set by the government that restricts how much sellers can charge for a good. It is distinct from price floors or changes in equilibrium prices caused by supply shifts.

Practice related questions from the same subject.

1.Broadcasting firms use satellite TV subscriptions and signal detection tools primarily to combat which issue?
2.Which of the following is a classic example of a public good?
3.Which of the following factors can lead to market failure?
4.When a neighbor burns yard debris and smoke enters your home, what type of externality does this represent?
5.Why is a competitive equilibrium considered Pareto efficient?

What is a price ceiling?

Explanation

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