Asked by Latasha Scott on May 10, 2024
Verified
An example of an effective price ceiling would be the government setting the price of wheat at ________ per bushel when the market price is at $4.25 per bushel.
A) $3.75
B) $4.25
C) $7.75
D) $12.00
Price Ceiling
A government-imposed limit on how high a price can be charged on a product or service, intended to protect consumers.
Market Price
The current price at which an asset or service can be bought or sold in a particular market.
- Acquire knowledge about the operation of price ceilings and floors and their effects on achieving market equilibrium.
Verified Answer
AM
ARINA MEMONMay 15, 2024
Final Answer :
A
Explanation :
An effective price ceiling is a legally established maximum price for a good or service that is set below the market equilibrium price. Since the market price is $4.25, setting the price at $3.75 per bushel would be an example of an effective price ceiling because it is below the market price, thereby limiting how high the price can go.
Learning Objectives
- Acquire knowledge about the operation of price ceilings and floors and their effects on achieving market equilibrium.