Which of the following is true?
i.A price ceiling set above the equilibrium price has no effects.
ii.A price ceiling set below the equilibrium price creates a surplus.
iii.A price floor set above the equilibrium price has no effects.
A) only i
B) only ii
C) only iii
D) i and ii
E) ii and iii

Question

Quizplus · Accepted Answer

i. A price ceiling set above the equilibrium price does not affect the market because the market can naturally settle at the equilibrium price, which is lower than the ceiling. ii. Incorrect because a price ceiling set below the equilibrium price creates a shortage, not a surplus, as demand exceeds supply. iii. Incorrect because a price floor set above the equilibrium price creates a surplus, as supply exceeds demand.

Which of the Following Is True