Exhibit 4-3 Refer to Exhibit 4-3. If price P₂ is a price ceiling, then A)there is a shortage in the market for good X. B)the highest price that can legally be charged in this market is P₃. C)the price at which exchange legally takes place in the market for good X is P₂. D)the quantity exchanged is less than the quantity demanded.

Question

Quizplus · Accepted Answer

A price ceiling is a legal price limit set by the government below the market equilibrium price. In this case, P₂ is the maximum price allowed, so it is the price at which exchange legally takes place in the market for good X. Therefore, choice C is correct. Choices A, B, and D are all incorrect because they do not accurately describe the effects of a price ceiling.

Exhibit 4-3 Refer to Exhibit 4-3. If Price P2 Is a Price

Exhibit 4-3 Refer to Exhibit 4-3. If Price P₂ Is a Price