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Figure: Understanding Price Ceilings and Floors
-(Figure: Understanding Price Ceilings and Floors)In the graph,which price would NOT allow for an effective price ceiling?

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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,which price would NOT allow for an effective price ceiling?

Quizplus · Accepted Answer

A price ceiling would be ineffective at $75 because it is already below the equilibrium price of $80. Therefore, there is no need for a price ceiling as the market is already driving prices down. A price ceiling only becomes effective when it is set below the equilibrium price, which in this case is anything below $80.

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