If a price ceiling is set below the market price, it is binding.

Name: If a price ceiling is set below the market price, it is binding.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

If a price ceiling is set below the market price, it will create a shortage of the good or service, as demand will exceed supply at the lower price. This shortage makes the price ceiling binding, as buyers will be willing to pay the market price, but will not be able to purchase the good or service at that price due to the price ceiling.

If a Price Ceiling Is Set Below the Market Price