A binding price ceiling is designed to:Question 2 options:a) increase efficiency.b) prevent shortages.c) keep prices below the equilibrium level.d) increase the quality of the good.
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A binding price ceiling is designed to c) keep prices below the equilibrium level.
What is a binding price?
A binding price ceiling is a term used to refer to a case whereby government sets a required price on a good or goods.
This price is usually set at a price below equilibrium.
Producers are are usually at the beneficial sides as a result of the binding price floor incase the price is higher than equilibrium price.
while Consumers are always worse off since they must pay more for a lower quantity.
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