A binding price ceiling will a. result in a product shortage. b. result in a product surplus. c. induce new firms to enter the industry. d. clear the market.

MACROECONOMICS FOR TODAY
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ISBN:9781337613057
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Chapter4: Markets In Action
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A binding price ceiling will

a. result in a product shortage.
b. result in a product surplus.
c. induce new firms to enter the industry.
d. clear the market.
Expert Solution
Step 1

The price ceiling refers to a maximum-price that can be charged on a good service in the market, which is fixed by the government. A binding price ceiling happens when the government sets a required price on a good at a price below equilibrium, which foils an increase in the price of that good or service above the binding level.

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