25. The government decides to impose a priceceiling on a good, because it thinks

Question

25. The government decides to impose a priceceiling on a good, because it thinks the market determined price is“too high.” If it imposes the price ceiling above theequilibrium price: (Points: 3)
      consumers will respond to the higher price andtherefore wish to purchase less of the good than at the equilibriumprice.
       producers will respond tothe higher price and therefore offer fewer units forsale.
       consumers will purchaseless of the good after the price ceiling is imposed.
       there will be no changeto either the price of quantity in the market.


26. A price ceiling will have no effect if:(Points: 3)
       it is set above theequilibrium price.
       the equilibrium price isabove the price ceiling.
       set below the equilibriumprice.
       it creates ashortage.

Explanation / Answer

For 26 if the price ceiling is set below the current price youwill have a shortage because producers will be less willing toproduce due to a lower profit and that more people will be able toafford the item so more will be purchased. so set above is the correct answer for 26 25 Since its above the equilibrium price like in 26 there willbe no change so the answer ( there wil be no change to either theprice of quantity in teh market )

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