Explain what will happen when the government imposes a maximum price that is above the market equilibrium price. Why is this true?
What will be an ideal response?
The maximum price will have no impact on the market. This is true because the price ceiling will only have an impact when the market equilibrium price is above it. Firms and consumers will otherwise not change their behavior.
Economics
You might also like to view...
The federal government ran a budget deficit of approximately ________ in fiscal year 2011
A) $14 trillion B) $800 billion C) $250 billion D) $1.3 trillion
Economics
Which of the following is NOT a key principle of economics?
A) Optimization B) Equilibrium C) Empiricism D) Substitution
Economics