-The figure above illustrates the bagel market.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price (like $1.00 in this case) would make the price of a bagel $1.00 because the price cannot legally go above this ceiling, even if the market equilibrium would suggest a higher price. A price ceiling of $3.00, which is above the equilibrium price, would not affect the market because the equilibrium price ($2.00) is already below this ceiling. Without government intervention, the market would naturally settle at the equilibrium price of $2.00 per bagel, where supply equals demand. Therefore, statements A, B, and C are all correct.

-The Figure Above Illustrates the Bagel Market