A price ceiling is ______ if it is set _____ the market ...

[arivle123]

A price ceiling is ______ if it is set _____ the market equilibrium price.
 
  A. efficient and fair; below
  B. unfair but efficient; equal to
  C. efficient and unfair; above
  D. inefficient and unfair; below

Question 2

Mary Ellen lives in a large city and earns 100,000 a year. Her sister, Molly, lives in a small rural community and earns only 20,000 a year.
 
  Based on this information, can you conclude that Mary Ellen is better off than her sister? Explain your answer.

[Liddy]

Answer to Question 1

D A price ceiling set below the equilibrium price creates ineffi-ciency and is unfair by both measures of fairness.

Answer to Question 2

From this information it is impossible to determine who is better off. Mary Ellen's income is higher than Molly's, but Molly may be willing to sacrifice income so that she doesn't have to deal with the problems associated with living in a large city. Income is an imperfect measure of well-being.

[arivle123]

Thanks for the timely response, appreciate it

[chereeb]

Excellent