If a price ceiling is not binding, then
A)the equilibrium price is above the price ceiling.
B)the equilibrium price is below the price ceiling.
C)it cannot be legally enforced.
D)None of the above is correct because all price ceilings must be binding.

Question

If a price ceiling is not binding, then
A)​the equilibrium price is above the price ceiling.
B)​the equilibrium price is below the price ceiling.
C)​it cannot be legally enforced.
D)​None of the above is correct because all price ceilings must be binding.

Quizplus · Accepted Answer

A price ceiling is not binding if it is set above the equilibrium price, meaning the market can operate freely below that ceiling. Thus, the equilibrium price is below the price ceiling.

If a Price Ceiling Is Not Binding, Then