Graph 6-2

-According to Graph 6-2, a binding price ceiling would exist at a price of:

Question

Graph 6-2
 
-According to Graph 6-2, a binding price ceiling would exist at a price of:

Quizplus · Accepted Answer

A binding price ceiling is a government-imposed limit on how high a price can be charged for a good or service. In the given graph, the supply curve intersects the demand curve at a price of $8.00, which represents the market equilibrium price. If a binding price ceiling is imposed, it would be set below the market equilibrium price in order to make goods more affordable for consumers. In this case, a binding price ceiling would exist at a price of $5.00, as this is the maximum price at which quantity supplied equals quantity demanded. At any price above $5.00, there would be excess supply, which would result in a shortage of the good. Therefore, C) $5.00 is the correct choice.

Graph 6-2 -According to Graph 6-2, a Binding Price Ceiling Would Exist