A price ceiling is a legal maximum on the price at which a good can be sold. It is often set by the government to protect consumers who may not be able to afford the market price of a good. However, price ceilings can also create shortages and reduce the quality of the good being sold.

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A Price Ceiling

Question 9

Multiple Choice

A price ceiling

A) is a legal maximum on the price at which a good can be sold.
B) is often imposed in markets in which "cutthroat competition" would prevail without a price ceiling.
C) is often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.
D) All of the above are correct.

Correct Answer: