Question

139. In the above market, economists would call a government-set maximum price of $40 a:

A. price ceiling.
B. price floor.
C. equilibrium price.
D. fair price.

Answer 1

A government-set maximum price of $40 would be referred to as a price ceiling. It is a legal limit on the price of a good or service, set below the equilibrium price.

Step-by-step explanation:

In the given market, a government-set maximum price of $40 would be referred to as a price ceiling. A price ceiling is a legal limit on the price of a good or service, set below the equilibrium price. It aims to make the good or service more affordable for consumers.