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Chapter 4: Q.12 (page 104)

Select the correct answer.

A price ceiling will usually shift:

a. demand

b. supply

c. both

d. neither

Short Answer

Expert verified

d.neither.

Step by step solution

01

Definition

A price ceiling is an upper limit imposed on the price of a product. This limit is imposed to protect the consumers in the market to ensure that they don't have to pay a price too high.

02

Explanation

Neither. A change in demand or supply indicates that at any given price, more or less is demanded or provided. A price ceiling has no effect on the demand or supply curves. If the price ceiling is set lower than the equilibrium, the amount required on the demand curve will exceed the quantity supplied on the supply curve, resulting in excess demand.

03

Conclusion

Therefore, it will produce excess demand because the quantity demanded on the demand curve will be more than the quantity delivered on the supply curve.

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Most popular questions from this chapter

In the financial market, what causes a movement along the supply curve? What causes a shift in the supply curve.

In the financial market, what causes a movement along the demand curve? What causes a shift in the demand curve?

Select the correct answer. A price floor will usually shift

a. demand

b. supply

c. both

d. neither

Illustrate your answer with a diagram.

Why are the factors that shift the demand for a product different from the factors that shift the demand for labor? Why are the factors that shift the supply of a product different from those that shift the supply of labor?

29. Predict how each of the following events will raise or lower the equilibrium wage and quantity of oil workers in Texas. In each case, sketch a demand and supply diagram to illustrate your answer.

a. The price of oil rises.

b. New oil-drilling equipment is invented that is cheap and requires few workers to run.

c. Several major companies that do not drill oil open factories in Texas, offering many well-paid jobs outside the oil industry.

d. Government imposes costly new regulations to make oil drilling a safer job.
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