If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

Name: If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.
Brand: Quizplus
Rating: 5.0 (53 reviews)

Question

Quizplus · Accepted Answer

Since the price ceiling ($1.50) is below the market equilibrium price ($2), it restricts the price from reaching its natural equilibrium, making it a binding constraint.

If a Price Ceiling of $1