Graph 4-1

-In Graph 4-1, a price ceiling that is not binding is shown in:

Question

Graph 4-1
 
-In Graph 4-1, a price ceiling that is not binding is shown in:

Quizplus · Accepted Answer

In panel a, the equilibrium price is already below the imposed price ceiling, indicating that the ceiling is not binding and will have no effect on the market. In contrast, panel b shows a binding price ceiling where the equilibrium price is above the imposed ceiling, leading to a shortage of the product. Thus, the only panel where the price ceiling is not binding is panel a.

Graph 4-1 -In Graph 4-1, a Price Ceiling That Is Not Binding