If the equilibrium price for some product is $1000, a price ceiling of $1200 will result in
A) the same general effects as an administered price of $1200.
B) massive surpluses of the good.
C) the same general effects as a price floor of $1200
D) no effects because the price ceiling is not binding at that price.
E) the same general effects as a price ceiling of $600.

Question

Quizplus · Accepted Answer

The price ceiling of $1200 is higher than the equilibrium price of $1000, so it is not binding and will have no effects on the market. Therefore, the answer is D - no effects because the price ceiling is not binding at that price.

If the Equilibrium Price for Some Product Is $1000, a Price