A binding price ceiling
i.causes a surplus.
ii.causes a shortage.
iii.is set at a price above the equilibrium price.
iv.is set at a price below the equilibrium price.
A) (ii) only
B) (iv) only
C) (i) and (iii) only
D) (ii) and (iv) only

Question

Quizplus · Accepted Answer

A binding price ceiling is set below the equilibrium price, causing a shortage because the quantity demanded exceeds the quantity supplied at that price.

A Binding Price Ceiling