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a_sh-v [17]
3 years ago
7

If a binding price ceiling is imposed on the baby formula market, then a. the quantity of baby formula demanded will increase. b

. the quantity of baby formula supplied will decrease. c. a shortage of baby formula will develop. d. All of the above are correct.
Business
1 answer:
Inessa05 [86]3 years ago
8 0

Answer:

d. All of the above are correct.

Explanation:

Market is at equilibrium where demand = supply & the corresponding  curves intersect.

Price ceiling is maximum price mandated by the government at which a good can be sold in the market. It is usually below equilibrium price, set to bring necessity goods under affordable price bracket of poor people.

A&B This artificially reduced price : - Increases Quantity Demanded of the good (Baby Formula here), because of price & quantity demanded inverse relationship as per law of demand. -- Decreases Quantity Supplied of it , because of price & quantity demanded direct relationship as per law of supply.

C This quantity demanded increase & quantity supplied decrease at lower prices creates shortage of the good (Baby Formula here).

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