According to the market in the graph shown, at which of the following prices could a binding price ceiling be set?

Question

Quizplus · Accepted Answer

A binding price ceiling is a regulation that prevents a price from rising above a certain level. In this graph, the equilibrium price is $10, which is where the supply and demand curves intersect. A binding price ceiling must be set below the equilibrium price. The highest price that a binding price ceiling could be set is at the point where the demand curve intersects with the horizontal line that corresponds to the desired price ceiling. This point is at a price of $8, which is the answer choice C. Therefore, a binding price ceiling could be set at $8.

According to the Market in the Graph Shown, at Which