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- Subject
- Prices, Wages & Taxeseconomics-mcqs › prices-wages-taxes
- Published
- 30 May 2019
- Last updated
- 28 May 2026
If the government sets a price ceiling of Rs150 per litre on petrol while the market equilibrium price is Rs100 per litre, which of the following statements is accurate?
Multiple choice question for Prices, Wages & Taxes. Select an option, then review the explanation below.
Explanation
When the price ceiling is set above the equilibrium price, it is initially non-binding. However, if demand for petrol increases significantly, the ceiling could become a binding constraint by preventing prices from rising above Rs150, thus limiting market adjustments.
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Practice related questions from the same subject.
- 1.Which statement accurately describes how the tax burden is allocated?
- 2.When a tax is imposed on an essential product, who is most likely to bear the majority of the tax burden?
- 3.If a tax is imposed on buyers in a market, what is the effect on the distribution of the tax burden?
- 4.In the supply and demand framework, when a tax is imposed on sellers of a product, which curve shifts and in what direction?
- 5.Which type of employee is most likely to face greater challenges in securing employment following an increase in the minimum wage?