1. What will happen in a market where a nonbinding price ceiling is removed? A.
ID: 1136903 • Letter: 1
Question
1. What will happen in a market where a nonbinding price ceiling is removed?A. There will be downward pressure on the price in the legal market
B. The products sold will improve in quality and become more plentiful
C. Sellers will face a reduced incentive to sell the product
D. The price and quantity will not change in the legal market
E. There will be increased pressure to'buy and sell the good on the black market
1-2 lf a store sells a good at the market price, even though the govemment authonities have set the minimum price that can be charged, the store is selling the good in a(n) A. black market for a market price that is higher
B. black market for a market price that is lower
C effort to eliminate a surplus of the good
D legal market for a market price that is higher
E legal market for a market price that is lower
6. If a store sells a good at the market price, even though the govemment authorities have set the maximum price that can be charged for it, the store is selling the good in a(n)
A. black market for a market price that is higher
B. black market for a market price that is lower
C effort to eliminate a surplus of the good
D legal market for a market price that is higher
E legal market for a market price that is lower
1. What will happen in a market where a nonbinding price ceiling is removed?
A. There will be downward pressure on the price in the legal market
B. The products sold will improve in quality and become more plentiful
C. Sellers will face a reduced incentive to sell the product
D. The price and quantity will not change in the legal market
E. There will be increased pressure to'buy and sell the good on the black market
1-2 lf a store sells a good at the market price, even though the govemment authonities have set the minimum price that can be charged, the store is selling the good in a(n) A. black market for a market price that is higher
B. black market for a market price that is lower
C effort to eliminate a surplus of the good
D legal market for a market price that is higher
E legal market for a market price that is lower
6. If a store sells a good at the market price, even though the govemment authorities have set the maximum price that can be charged for it, the store is selling the good in a(n)
A. black market for a market price that is higher
B. black market for a market price that is lower
C effort to eliminate a surplus of the good
D legal market for a market price that is higher
E legal market for a market price that is lower
1. What will happen in a market where a nonbinding price ceiling is removed?
A. There will be downward pressure on the price in the legal market
B. The products sold will improve in quality and become more plentiful
C. Sellers will face a reduced incentive to sell the product
D. The price and quantity will not change in the legal market
E. There will be increased pressure to'buy and sell the good on the black market
1-2 lf a store sells a good at the market price, even though the govemment authonities have set the minimum price that can be charged, the store is selling the good in a(n) A. black market for a market price that is higher
B. black market for a market price that is lower
C effort to eliminate a surplus of the good
D legal market for a market price that is higher
E legal market for a market price that is lower
6. If a store sells a good at the market price, even though the govemment authorities have set the maximum price that can be charged for it, the store is selling the good in a(n)
A. black market for a market price that is higher
B. black market for a market price that is lower
C effort to eliminate a surplus of the good
D legal market for a market price that is higher
E legal market for a market price that is lower A. black market for a market price that is higher
B. black market for a market price that is lower
C effort to eliminate a surplus of the good
D legal market for a market price that is higher
E legal market for a market price that is lower
Explanation / Answer
1. A price ceiling (legal maximum price) is binding when it is set below the market price and therefore prevents the market from reaching equilibrium. But, in case of a non binding price ceiling, price ceiling is set above the equilibrium price. In that case, in a legal market, equilibrium price will be charged. When this non binding price ceiling is removed the price and quantity will not change in the legal market because it is already operating at market equilibrium.
Answer- Option D
2. If a store sells a good at the market price, even though the government authorities have set the minimum price that can be charged (price floor), it means the price floor is not binding and the market can operate at equilibrium. A price floor is non binding when market equilibrium price is set above the price floor.
Answer- option D
6. If a store sells the good at the market price, even though the government authorities have set the maximum price that can be charged for it (price ceiling), that means the price ceiling is not binding, i.e. it is set above the market equilibrium price. So, the store is selling good in a legal market for a market price that is lower than the price ceiling.
Answer- option E
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