« previous next »

Author Question: In order for a price ceiling to have an effect on the market, must it be set above or below the ... (Read 51 times)

LCritchfi

  • Hero Member
  • *****
  • Posts: 519
on: Jun 29, 2018
In order for a price ceiling to have an effect on the market, must it be set above or below the equilibrium price? Why?
 
  What will be an ideal response?

Question 2

Of the following items, which has the most inelastic demand?
 
  A) food
  B) fruit
  C) apples
  D) Gala apples


dellikani2015

  • Sr. Member
  • ****
  • Posts: 332
Reply #1 on: Jun 29, 2018
Answer to Question 1

In order to have an effect, the price ceiling must make the equilibrium price illegal and so it must be set below the equilibrium price. A price ceiling is the highest price that can legally be charged for the product. If it is set above the equilibrium price, the equilibrium price is less than the ceiling price and hence is legal. Therefore the price and the quantity are not affected. However if the ceiling price is less than the equilibrium price, the equilibrium price becomes illegal. As a result, the price ceiling will have an impact on the market by lowering the price. With the lower price, the quantity demanded increases while the quantity supplied decreases so that a shortage of the product emerges.

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Drug-induced pharmacodynamic effects manifested in older adults include drug-induced renal toxicity, which can be a major factor when these adults are experiencing other kidney problems.

Did you know?

The first oral chemotherapy drug for colon cancer was approved by FDA in 2001.

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

Did you know?

Human neurons are so small that they require a microscope in order to be seen. However, some neurons can be up to 3 feet long, such as those that extend from the spinal cord to the toes.

Did you know?

As many as 20% of Americans have been infected by the fungus known as Histoplasmosis. While most people are asymptomatic or only have slight symptoms, infection can progress to a rapid and potentially fatal superinfection.

Drugs and their effect table Drugs and their effect table
On March 25, 1911, as scores of young factory girls leaped to their deaths from the eighth, ninth, a On March 25, 1911, as scores of young factory girls leaped to their deaths from the eighth, ninth, a
A person with a defective "P" gene might only have it effect the EYES A person with a defective "P" gene might only have it effect the EYES
Hall-effect switches use metallic shutters to shunt magnetic lines of force away from a silicon ... Hall-effect switches use metallic shutters to shunt magnetic lines of force away from a silicon ...
Effect of antidiuretic hormone deficiency. Effect of antidiuretic hormone deficiency.
Effect of pH on drug absorption. (a) A weak acid such as aspirin (ASA) is in a nonionized form in an ... Effect of pH on drug absorption. (a) A weak acid such as aspirin (ASA) is in a nonionized form in an ...
Video: Glomerubular filtrate rate -pressures that affect GFR and net filtration pressure

For a complete list of videos, visit our video library