Market demand is given as QD = 100 - 2P.Market supply is given as QS = P + 10.Which legally imposed price would constitute a binding price ceiling?
A) $10
B) $30
C) $40
D) $60

Question

Market demand is given as QD = 100 - 2P.Market supply is given as QS = P + 10.Which legally imposed price would constitute a binding price ceiling?  
A) $10 
B) $30 
C) $40 
D) $60

Quizplus · Accepted Answer

A binding price ceiling is set below the equilibrium price. The equilibrium price is found where QD = QS, which is at P = $30. Therefore, a price ceiling below $30, such as $10, would be binding.

Market Demand Is Given as QD = 100 - 2P