Question

Soal 17 In order to have an effect, a price ceiling must be set Select one
a by suppliers
b. equal to the equilibrium price
c. below the equilibrium price
d. above the equilibrium price

Answer 1

Correct answer is option c i.e. below the equilibrium price because they are set by the government in order to prevent prices rising above a certain level for some products.

Option a is incorrect as price ceiling is are set by the government.

Option b is incorrect as price ceiling is not effective when it is set equal to equilibrium price because market equilibrium still holds.

Option d is incorrect as price ceiling is not effective when it is set above the equilibrium price because market equilibrium still holds and there exists no quantity shortages.