Figure 6-11
-Refer to Figure 6-11.If the government imposes a price ceiling at $6,it would be

Question

Figure 6-11 
-Refer to Figure 6-11.If the government imposes a price ceiling at $6,it would be

Quizplus · Accepted Answer

When the government imposes a price ceiling at $6, it would be non-binding if market demand is Demand A because the equilibrium price is already below the ceiling at $4. However, for Demand B, the equilibrium price is above the ceiling at $8, so the price ceiling would become binding to hold the price at $6. Therefore, the correct choice is D, non-binding if market demand is Demand A and binding if market demand is Demand B.

Figure 6-11 -Refer to Figure 6-11.If the Government Imposes a Price Ceiling