QUESTION 10 A price ceiling is O an equilibrium price O a mi

QUESTION 10 A price ceiling is O an equilibrium price. O a minimum legal price. O a maximum legal price. O a market-determined price. QUESTION 11 If a price ceiling is set above the equilibrium price, then 0 there will be neither a shortage nor a surplus of the good. there will be a surplus of the good. there will be a shortage of the good. the price ceiling affects suppliers but not demanders

Solution

1. option c

Price ceiling is the maximum price, limit price that government imposes in a particular market. The government imposes price ceiling in the market so that producers do not charge very high price for a commodity of a service.

2. option a

when the price ceiling is above the market equilibrium price, it is not binding. Producers charge the equilibrium price for the good, therefore there is neither shortage nor surplus.