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Figure: Understanding Price Ceilings and Floors
-(Figure: Understanding Price Ceilings and Floors)In the graph,if the government sets a price of $25,this is an example of an:

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Use the following to answer questions 
Figure: Understanding Price Ceilings and Floors 
-(Figure: Understanding Price Ceilings and Floors)In the graph,if the government sets a price of $25,this is an example of an:

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In the given graph, the horizontal line at $25 represents a price ceiling, which is the maximum price that can be charged for the good. If the government sets this price, it will be an effective price ceiling because it will prevent the market from setting a higher price. On the other hand, if the government had set a minimum price, it would have been an effective price floor. Therefore, the best choice is A) effective price ceiling.

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