-Refer to the above figure. If government sets the maximum legal price of gasoline at $2 per gallon, then the $2 limit acts as
A) a price floor.
B) a price ceiling.
C) an equilibrium price.
D) a just price.

Question

-Refer to the above figure. If government sets the maximum legal price of gasoline at $2 per gallon, then the $2 limit acts as
A) a price floor. 
B) a price ceiling. 
C) an equilibrium price. 
D) a just price.

Quizplus · Accepted Answer

A price ceiling is a legal maximum on the price at which a good can be sold. In this case, setting the maximum legal price of gasoline at $2 per gallon acts as a price ceiling, limiting how high the price can go.

-Refer to the Above Figure