Question

For a price ceiling to be a binding constraint on the market, the government must set it a above the equilibrium price. b below the equilibrium price. c precisely at the equilibrium price. d at any price because all price ceilings are binding constraints.

Answer 1

Answer:

B. Below the equilibrium price

Explanation:Price ceiling is the legal price,impose by The Government or Regulatory agencies above which a product should not be sold. It is also a price control mechanism through which the Government and other Regulatory agencies check the excesses of producers and the middle men(Whole sellers and retailers). The price ceiling has to be fixed below the equilibrium price for it to be binding, because businesses are interested mainly for profit maximization.