Asked by Andrew Cavender on May 05, 2024
Verified
Refer to Figure 4.3. The government setting the price of pencils at $0.40 would be an example of an effective
A) price floor.
B) price ceiling.
C) market equilibrium.
D) price surplus.
Price Ceiling
A maximum price that sellers may charge for a good, usually set by government.
Government Setting
The environment and conditions created by governmental policies, laws, and regulations.
Price Of Pencils
The amount of money required to purchase a pencil, determined by factors such as production costs, demand, and supply.
- Analyze the effect that setting price limits, such as maximum and minimum allowable prices, has on market equilibrium.
Verified Answer
AV
Aiyanna VerellaqMay 11, 2024
Final Answer :
B
Explanation :
A price ceiling is a government-imposed limit on how high a price can be charged for a product, service, or commodity. Setting the price of pencils at $0.40, if below the market equilibrium price, would prevent sellers from charging more than this amount, making it an example of a price ceiling.
Learning Objectives
- Analyze the effect that setting price limits, such as maximum and minimum allowable prices, has on market equilibrium.