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Figure: Determining Surplus and Loss
-(Figure: Determining Surplus and Loss)In the graph,if the government sets a price of $5,this is an example of an:

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Use the following to answer questions 
Figure: Determining Surplus and Loss 
-(Figure: Determining Surplus and Loss)In the graph,if the government sets a price of $5,this is an example of an:

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When the government sets a maximum price limit, it is called a price ceiling. In this case, if the government sets a price of $5, it is below the equilibrium price, creating a shortage or excess demand, resulting in a surplus for producers and a loss for consumers. Hence, it is an effective price ceiling.

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