Answered

24. A price ceiling can be defined as:

A. Government establishing a minimum price at which a good or service can sell.

B. Government establishing a maximum price at which a good or service can sell.

C. Government establishing a price that is roughly equal to the market price.

D. Government establishing a price that is 5% higher than the market equilibrium price.



Answer :

GinnyAnswer

Final answer:

A price ceiling limits the maximum price of a good or service, set by the government to protect consumers. It must be lower than the free-market equilibrium price to be effective.


Explanation:

A price ceiling is a legal maximum price that one pays for some good or service. The government imposes price ceilings to keep essential goods or services affordable, such as during natural disasters to prevent price gouging. For a price ceiling to be effective, it must be set below the free-market equilibrium price determined by competition.


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