Figure 6-4
-Refer to Figure 6-4.A government-imposed price of $16 in this market could be an example of a
(i)Binding price ceiling.
(ii)Non-binding price ceiling.
(iii)Binding price floor.
(iv)Non-binding price floor.

Question

Figure 6-4 
-Refer to Figure 6-4.A government-imposed price of $16 in this market could be an example of a
(i)Binding price ceiling.
(ii)Non-binding price ceiling.
(iii)Binding price floor.
(iv)Non-binding price floor.

Quizplus · Accepted Answer

A government-imposed price of $16 could be a non-binding price ceiling if the equilibrium price is below $16, meaning the ceiling does not affect the market. It could also be a binding price floor if the equilibrium price is below $16, meaning the floor is above the equilibrium and affects the market.

Figure 6-4 -Refer to Figure 6-4.A Government-Imposed Price of $16 in This