Refer to the information provided in Figure 4.3 below to answer the question(s) that follow. Figure 4.3
-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.

Question

Refer to the information provided in Figure 4.3 below to answer the question(s) that follow.  Figure 4.3
-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.

Quizplus · Accepted Answer

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.

Refer to the Information Provided in Figure 4