To be binding, a price ceiling must be set at a price:
A) lower than the equilibrium price.
B) higher than the equilibrium price.
C) the same as the equilibrium price.
D) Any price ceiling is binding.

Question

Quizplus · Accepted Answer

A price ceiling is binding when it is set below the equilibrium price because it prevents the market from reaching the equilibrium price, leading to a shortage.

To Be Binding, a Price Ceiling Must Be Set at a Price