Price Ceiling Answers
Definition: Price Ceiling is a government-set maximum price that sellers are allowed to charge for a good; a form of price control
Example: Rent control on apartments in New York City.
1. Possible answers: inefficient allocation to consumers, wasted resources, inefficiently low quality, and black markets.
2. False, the price ceiling would need to be below the equilibrium point to be effective.
3. Yes, in fact price ceiling is defined as a government set maximum price.
Definition: Price Ceiling is a government-set maximum price that sellers are allowed to charge for a good; a form of price control
Example: Rent control on apartments in New York City.
1. Possible answers: inefficient allocation to consumers, wasted resources, inefficiently low quality, and black markets.
2. False, the price ceiling would need to be below the equilibrium point to be effective.
3. Yes, in fact price ceiling is defined as a government set maximum price.