Suppose the government imposes a price ceiling above the equilibrium price of a given good. d)Which...

Suppose the government imposes a price ceiling above the equilibrium price of a given good. d)Which of the following is the most likely result?

a)Some other rationing device will emerge to allocate the good among buyers.

b)Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling.

c)No change will occur in the market.

d) Brute force will be used to allocate the good among buyers.

e)a, b, and d

Expert Solution

Correct option: (c) No change will occur in the market

Reason: A price ceiling above the equilibrium price is a non binding price ceiling and it does not affect the market. No change in supply or demand occurs.

Rahul Sunny answered 2 years ago

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