An example of an effective price ceiling would be the government setting the price of wheat at ________ per bushel when the market price is at $4.25 per bushel.
A) $3.75
B) $4.25
C) $7.75
D) $12.00

Question

Quizplus · Accepted Answer

An effective price ceiling is a legally established maximum price for a good or service that is set below the market equilibrium price. Since the market price is $4.25, setting the price at $3.75 per bushel would be an example of an effective price ceiling because it is below the market price, thereby limiting how high the price can go.

An Example of an Effective Price Ceiling Would Be the Government