Assertion (A): A price ceiling set above the equilibrium price has no effect on the market.
Reason (R): The market price can settle at equilibrium, which is below the ceiling.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Both are true, and R explains A: a cap above where the price would be anyway never bites.

Concept: A ceiling that does not bind
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsPrice ceiling and price floor

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Ten questions from Market Equilibrium & Price Controls, at your own pace.

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Ten questions from Market Equilibrium & Price Controls, at your own pace.

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Assertion (A): A price ceiling set above the equilibrium price has no effect on the market.Reason (R): The market price can settle at equilibrium, which is below the ceiling.

Explanation

Assertion (A): A price ceiling set above the equilibrium price has no effect on the market.
Reason (R): The market price can settle at equilibrium, which is below the ceiling.