Use the following to answer question: -(Figure: Supply and Demand)Use Figure: Supply and Demand.A binding price ceiling is represented by: A)the price P₁. B)the price P₂. C)the price P₃. D)point C.

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A binding price ceiling occurs when the government sets a maximum price below the equilibrium price. In this figure, price ceiling P₃ is below the equilibrium price EQ, which creates a shortage of goods. Thus, the best choice is C.

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