Figure 6-3
-Refer to Figure 6-3.Which of the following price ceilings would be binding in this market?

Question

Figure 6-3 
-Refer to Figure 6-3.Which of the following price ceilings would be binding in this market?

Quizplus · Accepted Answer

The intersection of the demand and supply curve (where they meet) shows the equilibrium price and quantity in the market. In this case, the equilibrium price is $10 and the equilibrium quantity is 150 units. A price ceiling below the equilibrium price creates a shortage in the market, meaning that the quantity demanded by consumers exceeds the quantity supplied by producers. Thus, a price ceiling of $8 would be binding in this market as it is below the equilibrium price and would create a shortage of 50 units. Price ceilings of $10, $12, and $14 would not be binding as they are either equal to or above the equilibrium price, resulting in no impact on the market.

Figure 6-3 -Refer to Figure 6-3.Which of the Following Price Ceilings Would