Multiple Choice
Which of the following is an example of price fixing?
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Price Ceilings, Price Floors, and Black Markets
Multiple Choice
Which of the following determines the maximum legal price at which a product can be sold in a market?
A
A price ceiling imposed by the government
B
The equilibrium price set by supply and demand
C
A price floor established by producers
D
Consumer willingness to pay
Verified step by step guidance1
Understand the concept of a price ceiling: it is a maximum legal price set by the government that sellers cannot exceed when selling a product.
Recognize that the equilibrium price is determined by the intersection of supply and demand, but it is not a legal limit; it is a market outcome.
Know that a price floor is a minimum legal price, which sets a lower bound, not an upper bound, on prices.
Consumer willingness to pay reflects demand preferences but does not legally restrict prices.
Conclude that the maximum legal price at which a product can be sold is determined by a price ceiling imposed by the government.
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