When a binding price ceiling is imposed on a market,
A)price no longer serves as a rationing device.
B)the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling.
C)all buyers benefit.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When a binding price ceiling is imposed on a market, the price can no longer rise to balance the quantity demanded and the quantity supplied. This means that the price no longer serves as a rationing device, and there may be shortages or surpluses of the good or service. While it is possible that some buyers may benefit from the lower price, others may be unable to purchase the good or may face long waiting times or poor quality due to the imbalance of supply and demand. The quantity supplied at the price ceiling may be less than, equal to, or greater than the quantity that would have been supplied without the price ceiling, depending on the specific conditions of the market. Therefore, only choice A is the best answer.

When a Binding Price Ceiling Is Imposed on a Market