referring to the graph above, which of the following would be correct? price floor at $10 would be binding…
referring to the graph above, which of the following would be correct? price floor at $10 would be binding. price ceiling at $60 would be non - binding. price floor at $100 would be non - binding. price ceiling at $90 would be binding. price ceiling at $30 would be binding. price floor at $60 would be binding.
Answer
Brief Explanations:
A price - ceiling is binding if it is set below the equilibrium price, and a price - floor is binding if it is set above the equilibrium price. The equilibrium price in the graph is $70. A price ceiling of $60 is below the equilibrium price, so it is binding. A price ceiling of $90 is above the equilibrium price, so it is non - binding. A price ceiling of $30 is below the equilibrium price, so it is binding. A price floor of $10 is below the equilibrium price, so it is non - binding. A price floor of $100 is above the equilibrium price, so it is binding. A price floor of $60 is below the equilibrium price, so it is non - binding.
Answer:
Price ceiling at $30 would be binding.