Exhibit 5-11
Panel (a)
Panel (b)
-Refer to Exhibit 5-11. The price ceiling shown in panel (a)
A)is not binding.
B)creates a surplus.
C)creates a shortage.
D)None of the above are correct.

Question

Exhibit 5-11
Panel (a)
Panel (b)  ​ 
-Refer to Exhibit 5-11. The price ceiling shown in panel (a)
A)​is not binding. 
B)​creates a surplus. 
C)​creates a shortage. 
D)​None of the above are correct.

Quizplus · Accepted Answer

The price ceiling shown in panel (a) is set above the equilibrium price, so it is not binding. The market will naturally reach the equilibrium price without intervention.