Imposing a price above the market equilibrium price creates a price ceiling and will result in excess demand price ceiling and will result in excess supply price floor and will result in excess demand price floor and will result in excess supply
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A price ceiling is a maximum price set by the government below the market equilibrium price, while a price floor is a minimum price set by the government above the market equilibrium price. Show more…
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Consider a market with an equilibrium price of $10. If the government imposes a price ceiling of $8, other things equal, the result will be as follow: A shortage will occur because the price ceiling is below the equilibrium price. A surplus will occur because the price ceiling is below the equilibrium price. The price ceiling will not affect the market which will remain at equilibrium. A surplus will occur because the price ceiling is above the equilibrium price.
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Brooke B.
If the price is below the equilibrium level, there is a _____________and prices will _____________. Hint: When it doubt draw it out! surplus; decrease surplus; increase shortage; increase excess demand; decrease
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