Neo-classical economic theory suggests which of the following to be true about a price-ceiling?
A) A price-ceiling imposed above the equilibrium price will be non-binding.
B) A price-ceiling imposed above the equilibrium price will lead to a shortage.
C) A price-ceiling imposed below the equilibrium price will lead to a surplus.
D) A price-ceiling imposed above the equilibrium price will be binding.

Question

Quizplus · Accepted Answer

A price-ceiling imposed above the equilibrium price is considered non-binding because it does not affect the market; the market can operate at its equilibrium without interference.

Neo-Classical Economic Theory Suggests Which of the Following to Be