A price ceiling is

Question

A price ceiling is

BlackTom AI · Accepted Answer

The question asks to identify what a price ceiling is, so we evaluate each option in turn.
Option 1: 'imposed to make sure everyone can earn a fair wage.' This is inaccurate as a definition of a price ceiling. While wage floors and wage policies are related to using government intervention to influence earnings, a price ceiling specifically targets the price of goods, not wages, so this statement confuses price controls with labor market interventions.
Option 2: 'a legal maximum on the price at which a good can be sold.' This matches the standard economic definition of a price ceiling: a legally established upper limit on price for a good or service. It directly describes the mechanism and its intended regulatory effect, distinguishing it from market-driven prices.
Option 3: 'often imposed on markets in which “cutthroat competition” would prevail without a price ceiling.' This statement includes a narrative about competition quality, but it mischaracterizes the purpose of price ceilings. Price ceilings are not primarily about preventing cutthroat competition; they aim to keep prices affordable for consumers, which can have other, sometimes unintended, distortive effects on supply.
Option 4: 'often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.' This implies a political motive based on sellers’ lobbying. In practice, price ceilings are enacted to address affordability and perceived consumer protection, not as a direct response to sellers’ arguments about market fairness. Consequently, this framing misstates the typical economic rationale for price ceilings.
Thus, evaluating all options, the second statement is the precise and accurate definition of a price ceiling, while the others either misstate the concept or describe related but distinct ideas.

A price ceiling isSingle choice

Similar Questions

In this market, there will be excess demand of 39 . Ironically, the amount of natural gas used with the price ceiling will be less than the natural gas used if the price was allowed to rise to the market level.

True of Fase? If the demand increased enough, the price ceiling could become non-binding.

True or False? if supply increased enough, the price ceiling could become non-binding.

假设香蕉的均衡价格为 5 美元，并实施 7 美元的价格上限。这将导致：

Figure 6-2 Refer to Figure 6-2. The price ceiling causes quantity

A binding price ceiling hurts all producers who would have sold the good in a perfectly competitive market

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler