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

A price ceiling is usually set by the government or an agency of the government. A price ceiling limits how high producers can sell their product. It sets the maximum price that can be charged for a good or service.

For a price ceiling to be effective, price has to be set below equilibrium price.

Because price is less than equilibrium price, the profits of producers would fall and producers would reduce supply. This would lead to an excess of demand over supply. This is known as a shortage.

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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

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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