Suppose that the market equilibrium price for a good is $1. A non-bonding price ceiling in this...
Question:
Suppose that the market equilibrium price for a good is $1. A non-bonding price ceiling in this market will result in a price set at _____.
a. $1
b. below $1
c. above $1
d. More information is needed to determine the answer.
Price Control:
In the marketplace, price control refers to the government intervention when it sets the market minimum or maximum price, irrespective of the market equilibrium. The government takes this action to protect the specific side, either demand or supply, of market participants and maintain their interest in making economic activities.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerThe correct option is: c. above $1
Explanation:
A price ceiling is the government-imposed maximum price of a good. It is the maximum price limit...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Price Ceilings and Price Floors in Microeconomics
from
Chapter 2 / Lesson 8
19K
Discover the definition of price ceiling and price floor in microeconomics, understand the difference between the two price controls, and explore examples and graphs of price ceilings and price floors.
Related to this Question
- Suppose that the market equilibrium price for a good is $1. A nonbinding price ceiling in this market will result in a price set at A. $1. B. below $1. C. above $1. D. More information is needed to determine the answer.
- A price ceiling is a government-mandated price set the equilibrium point and results in a market.
- If a price ceiling is to be effective, it should be set: a. Below the equilibrium price, and it will create a market surplus. b. Below the equilibrium price, and it will create a market shortage. c. Above the equilibrium price, and it will create a mark
- Market demand is given as Qd = 200 - 3P. Market supply is given as Qs = 2P + 100. Draw the curves and calculate the price and quantity in equilibrium. What would result if the market price were $30?
- Suppose market demand for a good is given by Q_p = 20 - 2P and market supply is Q_s = 2 + P where P is the market price. (a) Find the equilibrium price and quantity in this market. (b) What is t
- Suppose the equilibrium price in a market is $11. The government sets a maximum price of $13. This is an example of a(n): a. Equilibrium price b. Non-binding price ceiling c. Binding price floor d. Fa
- A price ceiling will have NO effect if: a. the equilibrium price is above the price ceiling. b. if it set above the equilibrium price. c. it creates a shortage. d. it is set below the equilibrium price.
- For a price ceiling to be binding it must A. be higher than the equilibrium price. B. be equal to the equilibrium price. C. be lower than the equilibrium price. D. create a shortage. E. create a surplus.
- A price ceiling will be binding only if it is set: a. equal to the equilibrium price. b. below the equilibrium price. c. above the equilibrium price. d. either above or below the equilibrium price.
- A) What is the difference between a price ceiling and a price floor? B) If a price ceiling for a good is set below the market equilibrium, what will happen to the quality and future availability of the good? Explain.
- In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in a [{Blank}].
- To affect the market outcome, a price floor A. must be set above the black market price. B. must be set above the legal price. C. must be set above the price ceiling. D. must be set above the equilibrium price.
- Suppose that from the condition of equilibrium above, what happens if the government a. imposes a price floor of $4 on commodity X? b. imposes instead a price ceiling of $2 on commodity X?
- If a price ceiling is set at $10, and the equilibrium market price is $8, which price will consumers actually pay? a. $10 b. $8 c. $18 d. $2
- Suppose the market demand for good X is given by QXd = 20 - 2PX If the equilibrium price of X is $5 per unit then consumer surplus is A. $100. 2 B. $75. C. $50. D. $25.
- Suppose that the demand and supply functions for good X are Qd= 298-8P Qs= -32 + 4P a. Find the equilibrium price and quantity? b. What is the market outcome if price is $35? What do you expect to h
- When an effective price floor is set for a market, the quantity demanded will be: a. less than the equilibrium quantity, and price will be less than the equilibrium price. b. less than the equilibrium quantity, and price will be greater than the equilib
- If a price ceiling is to be effective, it should be set Below the equilibrium price, and it will create a market surplus. Below the equilibrium price, and it will create a market shortage. Above the e
- In a competitive market, the market demand is Qd = 48 - 5P and the market supply is Qs = 7P. A price floor of $5 will result in a surplus of how much?
- 1. A price ceiling? A. Always results in a surplus. B. Always results in a shortage. C. Results in a surplus if the ceiling price is greater than the equilibrium price. D. Results in a shortage if the ceiling price is less than the equilibrium price. 2. I
- If a price ceiling is set at $10 and the equilibrium market price is $8, what price will consumers actually pay? a. $10 b. $8 c. $18 d. $2
- Suppose the equilibrium price in a market is $10. The government sets a minimum price of $12. This is an example of a: a equilibrium price. b nonbinding price floor. c binding price floor. d fair pric
- Suppose that the equilibrium price in the market is $10. If the current market price is $7.50: A. the equilibrium price will fall to $7.50. B. competition among buyers will increase the current price. C. the current price will fall below $7.50 as selle
- If a price ceiling is not binding, then: a. there will be a surplus in the market. b. there will be a shortage in the market. c. the market will be less efficient than it would be without the price ceiling. d. there will be no effect on the market price o
- Assume the market demand for a product is Q_D = 2,000 - 0.5P and the market supply is Q_S = 2P - 1,000. Solve the market equilibrium price and quantity.
- Does a price ceiling or a price floor cause a shortage of a good? Illustrate your answer using a graph.
- If a price support is maintained above the equilibrium price, the result will be a: A) Market price equal to the equilibrium price. B) Surplus of the product. C) Shortage of the product. D) Market
- Use the figure to answer the following questions. a. Note that the perfectly competitive market depicted in the figure is initially in long-run equilibrium with price equal to P1. Assume now that th
- Suppose Qs = -800 + 50p and Qd = 1200 - 30p. At a price of $30, the market will have: A. an equilibrium B. excess demand C. price ceiling D. excess supply
- The market demand is Q = 60 - 6P market supply 4P price ceiling $3 will result in?
- A price floor will have the largest effect if it is set: a. substantially above the equilibrium price b. slightly above the equilibrium price c. slightly below the equilibrium price d. substantially below the equilibrium price
- Draw a graph as a response to A, B, and C: A: If the current price is above the equilibrium price, what occurs? B: How do you determine the equilibrium price in a market? C: If the current price is
- The market supply and market demand are given: Qd=192-4O and Qs=4P Assume the market is in short run equilibrium. What is the price that each competitive firm must take? Now suppose that any given ind
- Assume that Q_d = 80 - 2P and Q_s = 2P - 20. At a price of $20, this market has A. a shortage of 20 units and the price will go up to reach the equilibrium price. B. a surplus of 20 units and the price will go up to reach the equilibrium price. C. a surpl
- Consider the market demand and supply given by the following: Qd = 50 - P and Qs = 2.5 + 1.5P. Use this information to answer the following questions. A) What is the equilibrium price and quantity? B) If the government sets a price floor of $25, what is t
- Consider the market demand and supply given by the following: Qd = 50 - P and Qs = 2.5 + 1.5 P. Use this information to answer the following questions. a. What is the equilibrium price and quantity? b. If the government sets a price floor of $25, what is
- Suppose demand and supply are given by Qd = 60 - P and Qs = P - 20. Determine the magnitude of the shortage if a price ceiling of $32 is imposed in the market.
- Assume that Q_d = 80-2P and Q_s = 2P-20, at a price of $20 this market has: A. a shortage of 20 units and the price will go up to reach the equilibrium price B. a surplus of 20 units and the price w
- The demand for a good is given by P=43-2Q. The market supply curve is given by P=8+3Q. Find the quantity that would be traded if a price ceiling of 20 were imposed.
- a. Given Q^D = 700 - 2P and Q^S = 2P - 100, what is the market equilibrium price (P*) and quantity (Q*)? b. Suppose a change occurs in the market such that Q^D = 700 - 2P and Q^S = 2P - 40. Calculate
- If Qd=100-2P, and Qs=-50 +3P 1) What is the market equilibrium price and quantity? Explain your answers in words and graphically 2) The government imposes a tac of $1 per unit. What are the after-ta
- When a price ceiling is imposed, long lines are likely to follow. The value of the time wasted waiting in these lines should be equal to the difference between the market equilibrium price and the imposed price ceiling. Suppose that demand for a good is
- The inverse demand for a homogeneous-product Stackelberg duopoly is P = 16,000 - 4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 4,000QL and CF(QF) = 6,000QF. Determine the equilibrium market price.
- 1. If a price support is maintained above the equilibrium price, the result will be a: a) Market price that is too low. b) Market price equal to the equilibrium price. c) Surplus of the product. d) Shortage of the product. 2. The primary focus of U.S. fa
- Suppose that market demand for a good is given by Q = 10 - 0.4P while market supply is given by Q = 3 + 0.5P where Q is the quantity of the good in units, and P is the price of the good in $ per unit.
- The demand curves for both goods "E" and "F" slope downwards-and-to-the-right. Assume the government installs a price floor in the market for good "E" at the equilibrium price and a price ceiling in t
- Suppose you are presented with the estimates of the supply and demand schedules (or lines) for a market. They are Q_s = 40 + 9*p and Q_d = 150 - 9*p. Solve for the equilibrium price. Solve for the eq
- Assume the current price of good X is too high (it is above the equilibrium price). In your own words, describe the equilibrating process that would take place in this market.
- To be binding, a price ceiling must be set at a price a) any price ceiling is binding b) lower than the equilibrium price c) higher than the equilibrium price d) the same as the equilibrium price
- Suppose we know the following market demand and supply curves for some commodity Q: (Demand): Q_D = 10,000 - 10P, (Supply): Q_S = - 500 + 2P. a) Find the equilibrium price and quantity, and graph your solution. b) What are the own-price demand and sup
- Suppose demand and supply are given by Qd = 60 - P and Qs = P - 20. If a price ceiling of $32 is imposed in the market, determine the full economic price paid by the consumers.
- In the market for a given product, when a price floor is set above the equilibrium price the result will be a. a decrease in the demand for the product. b. more exchanges made in the market. c. an
- A price ceiling will have the largest effect: a. substantially below the equilibrium price b. slightly below the equilibrium price c. substantially above the equilibrium price d. slightly above the equilibrium price
- Suppose that the market price for a good is $10 and the government imposes a price floor of $8. The quantity of this good exchanged will:
- Complete Table 3.1. Then answer the indicated question. In Table 3.1, the equilibrium market price is a) $4. b) $6. c) $2. d) $8.
- When a market is in equilibrium and a price floor is emposed below the equilibrium point, A. the Qd will increase B. the Qs will increase C. the market will stay in equilibrium D a surplus is creat
- If there is a shortage in the market, the market price: A. is in equilibrium. B. will decrease in the near future. C. is below the equilibrium price. D. is above the equilibrium price.
- If a price ceiling is to be binding or effective, it must be set A. very high. B. below the equilibrium price. C. at a level such that there exists some excess supply. D. at any disequilibrium pric
- Demand for a good is given by QD = 100 - P and supply by QS = 1.4P - 20, where P is the market price of the good. In equilibrium, the price would be.
- Price ceiling will prevent the market equilibrium A. if it is set below the equilibrium. B. results in a surplus C. if it is set above the equilibrium price. D. causes quantity demanded to exceed quantity supplied. E. Both A and D F. Both B and C
- Price ceilings keep the market price A. above the equilibrium price and create surpluses. B. above the equilibrium price and create shortages. C. below the equilibrium price and create surpluses. D. below the equilibrium price and create shortages.
- A shortage results when a. a nonbinding price ceiling is removed from the market. b. a binding price ceiling is removed from a market. c. a nonbinding price ceiling is imposed on a market. d. a binding price ceiling is imposed on a market.
- The market equilibrium is $20. Which price floor will NOT be binding? A. $18 B. $20 C. $24 D. All of these price floors will be binding.
- When a price ceiling is non-binding, the ceiling price is _____ the equilibrium price; when a price ceiling is binding, the ceiling price is ______ the equilibrium price. above; above below; above abo
- Which causes a shortage of a good, a price ceiling, or a price floor? Justify your answer with a graph.
- Does a price ceiling change the equilibrium price?
- Consider the market demand for a given good. If ED = -2.5 at the current market price, then a 1 percent increase in price will result in a: _.
- In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. The full economic price under a price ceiling of $3 is [{Blank}].
- If a price floor is non-binding, the market price will be the market equilibrium. A. below B. above C. equal to
- Consider a perfectly competitive market with MWTP(Q) = 40 - Q / 2 and MC(Q) = 10 + Q / 4. What is the equilibrium price? A. $10. B. $20. C. $30. D. $35. E. $40.
- Refer to the graph below. At the competitive market equilibrium, price is equal to [{Blank}] units of the good are produced. a. $18 and 70 b. $14 and 70 c. $12 and 50 d. $14 and 50 e. $18 and 50
- A market surplus occurs if the: a. price is below the equilibrium price. b. price is equal to the equilibrium price. c. equilibrium price is above the actual price. d. equilibrium price is below the actual price.
- A price floor set below the free market equilibrium A. would not be an effective floor B. would lead to excess demand C. keeps the price artificially high D. keeps the price artificially low
- Use the following graphs for a perfectly competitive market in the short run to answer the next question. What will happen in the long run to market supply and the equilibrium price of the product?
- If the free-market equilibrium price for some product is $25, then a legal price ceiling set at $15 will bring about: A) the same general effects as a price ceiling of $25. B) the same general effects as an equilibrium price of $15. C) no change in the
- A rising price because of the shortage of a good is a part of the: (Choose one.) A) equilibrium price B) law of market forces C) equilibrium quantity
- Suppose the demand curve is: P = 200 - 2Q_D and the supply curve is: P = 100 + 3Q_S. What is producer surplus in the market at the equilibrium price and quantity? A. $3200 B. $600 C. $2400 D. $4000 E. Cannot be determined from the information given.
- A price floor influences the outcome of a market if it is . A. set above the equilibrium price. B. an incentive for sellers to decrease supply of the good. C. an incentive for buyers to increase dema
- Suppose the government imposes a binding price floor in the market for wheat that is above the equilibrium price of wheat. The result of the price floor is likely to result in _____.
- A price ceiling will result in a shortage only if the ceiling price is ____________ the equilibrium price. a. Less than. b. Equal to. c. Greater than. d. Louder than.
- A price floor set above the market equilibrium price results in? A. a surplus at the floor price. B. a shortage at the floor price. C. no impact on the quantity that will be put on sale in that market. D. the most efficient use of our scarce resources.
- Solve for the equilibrium price and quantity (P* and Q*) both algebraically and graphically (using graph paper), for these four markets: Market 1: QD = 10 - P; QS = 5 Market 2: QD = 10 - P; QS = 5 +
- When the price is [{Blank}] the equilibrium price, we would expect there to be a [{Blank}] , causing the market to put [{Blank}] pressure on the price until it went back to the equilibrium price. a. below; shortage; downward b. above; shortage; downwar
- The market demand for a monopoly firm is estimated to be: Qd = 80,000 -400P + 3M + 2000PR where Q is output, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $60,000 and $15, respect
- Suppose demand and supply are given by the equations Q_D = 60 - P \;\textrm{and} \; Q_S = 1.0P - 10, respectively, where P is the price. Determine the magnitude of the shortage if a price ceiling of $25 is imposed in this market.
- When is a price ceiling binding? By using an appropriate diagram, explain the possible effects of a price ceiling if it is binding.
- The market demand and supply functions for some commodity Q have been estimated (this market is assumed to be perfectly competitive), respectively, as Q_D = 20,000 - 400P, Q_S = 5,000 + 600P where P is the price (dollars per unit) and Q is the rate of sal
- Consider a market with demand and supply functions explained by: Qd = 600 - 2P and Qs = 3P + 30. If a price ceiling of $50 were imposed on this good, what would be the resulting shorta
- Assume a market has a demand curve of D(P) = 60 - 3P and a fringe supply curve of S(P) = P - 15. Assume a cost curve for the incumbent is C(Q) = 100 + 4Q. Find the market outcome in terms of price and quantity both for a monopolist not facing a fringe and
- When a price ceiling is binding, the price is ...... the equilibrium price; when a price ceiling is non-binding, the price is ..... the equilibrium price. a. below; below b. below; above c. above;
- IIn traditional microeconomic analysis, market equilibrium for a tradable good or product is often illustrated as the intersection of the market's supply and demand curves that determines price and qu
- If a market is in equilibrium, is it necessarily true that all potential buyers and sellers are satisfied with the market price?
- Suppose that there were markets for 2-related goods. For good 1, demand is given 152-2p1-3p2 and supply is given by q1= 4p1-12. Note that subscript 1 indicates good 1 and subscript 2 indicates good 2. Given this information what would the equilibrium pri
- In a free market, if the price of a good is below the equilibrium price, then: A. government needs to set a higher price. B. suppliers, dissatisfied with growing inventories, will raise the price. C. demanders, to acquire the good, will bid the price high
- Suppose a price ceiling is set below the equilibrium price in the apple market. Which of the following best describes what will happen? a. a shortage will develop b. a surplus will develop c. the market will stay in equilibrium d. both a shortage and surp
- Suppose a price ceiling has no effect; this means that: A. people are finding a way to circumvent the law. B. it has no legal enforcement mechanism. C. the equilibrium price is below the price ceiling. D. the equilibrium price is above the price ceiling.
- A price ceiling will result in a shortage only if the ceiling price is ______ the equilibrium price. a. Less than b. Equal to c. Greater than d. Faster than
- Consider a market where demand is D: P = 30 - Q and supply is S: P = 0.5Q. Equilibrium is price Pe: a. $10 b. $11 c. $12 d. $13
- A market with demand Q = 10 - p is supplied by a monopoly with costs C(Q) = 6 + 2Q. Calculate the equilibrium price, output, and monopoly profits. What would be the equilibrium if the market were supp
- Suppose the equilibrium price set by supply and demand is lower than the price ceiling set by the government. The result will be a. a shortage. b. that quantity demanded is equal to quantity supplied. c. a surplus. d. a black market.
Explore our homework questions and answers library
Browse
by subject