Question

In the context of price ceilings, who does the government aim to help?

a) Buyers
b) Sellers
c) Both buyers and sellers
d) Neither buyers nor sellers

Answer 1

A price ceiling is a legal maximum price set by the government to help buyers by preventing the price of a good or service from rising above a certain level. The aim is to make the good or service more affordable for consumers.

Step-by-step explanation:

A price ceiling is a legal maximum price set by the government. Its aim is to help buyers by preventing the price of a specific good or service from rising above a certain level. By doing so, the government intends to make the good or service more affordable for consumers.

In terms of the options provided, the correct answer is a) Buyers. Price ceilings are implemented to protect consumers and ensure they have access to essential goods and services at a reasonable price.

In terms of the diagram, a price ceiling would create a horizontal line below the equilibrium price. This line represents the maximum price that can be charged for the good or service.