Answered: An increase in an effective price…

An increase in an effective price ceiling will do what in the relevant market? a. The surplus will increase.b. The surplus will decrease.c. The shortage will increase.d. The shortage will decrease.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

An increase in an effective price ceiling will do what in the relevant market?

a. The surplus will increase.
b. The surplus will decrease.
c. The shortage will increase.
d. The shortage will decrease.

Video Definition Video Definition Government regulation setting a maximum price a business may charge for a given good or service. A price ceiling itself does not cause demand or supply to change. It is simply a mechanism used to set a price that can be legally charged in the market. Price ceilings are often implemented during times of crisis to avoid price gouging.

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