A price ceiling that is set above the equilibrium price
A)causes suppliers to raise their prices.
B)is binding.
C)is non-binding.
D)creates a shortage.

Question

Quizplus · Accepted Answer

A price ceiling that is set above the equilibrium price is non-binding because it does not have an effect on the market outcome. In this case, the market price remains at the equilibrium price and quantity, and there is no shortage or surplus.

A Price Ceiling That Is Set Above the Equilibrium Price