Question

Suppose Price Control B is imposed as a price ceiling. Characterize the situation in the market by selecting all of the correct responses below: Price (S) Price Control B is O A. a binding price ceiling. O B. a non-binding price ceiling. When Price Control B is imposed as a price ceiling. O A. the quantity sold in the market will be equal to the equilibrium quantity OB. the quantity sold in the market will be less than the equilibrium quantity. O c. the quantity sold in the market will be greater than the equilibrium quantity Price Control A Price Control B When Price Control B is imposed as a price ceiling, will there be a shortage, a surplus, or neither? O A. surplus O B. neither O C. shortage Quantity When Price Control B is imposed as a price ceiling. O A. there will be some deadweight loss in the market. OB. there will not be any deadweight loss in the market. When Price Control B is imposed as a price ceiling. the CS is_ ____ what it is at equilibrium, and the PS is _______ what it is at equilibrium. O A. less than: greater than O B. greater than; equal to O c. less than; less than OD. less than; equal to O E. greater than: greater than OF. greater than; less than O G. equal to; equal to When Price Control B is imposed as a price ceiling the quantity sold is the allocatively efficient quantity O A. True OB. False

Answer 1

a) Price control B is a binding Price ceiling

b) The quantity sold will be less than the equilibrium quantity

c) There will a shortage with the price control B

d) There will be some deadweight loss in the market

e) CS is greater than what it is at equilibrium and PS is less than what it is at equilibrium

f) The quantity sold is not allocative efficient so the statement is False.