Market demand is given as Q_D= 120 - 2P.Market supply is given as Q_S= P + 30.Which legally imposed price would constitute a binding price ceiling

Question

Quizplus · Accepted Answer

A binding price ceiling is set below the equilibrium price. Solving for equilibrium, set QD = QS: 120 - 2P = P + 30, which gives P = 30. A price ceiling of $10 is below this equilibrium price, making it binding.

Market Demand Is Given as QD = 120 - 2P

Market Demand Is Given as Q_D= 120 - 2P