A price ceiling is the legal maximum that companies can charge for a good. If the government says that car rental companies cannot charge more than $20 per day (the legal maximum) for a rental, they are setting a price ceiling.
A binding price ceiling is a price ceiling that is set below the equilibrium price. Since the equilibrium price is $3, the price has to be $1.80, due to the fact that binding price ceilings cause a shortage, while a non-binding price ceiling has no effect on the equilibrium price and quantity. Show transcribed image text Price controls-Basic concepts Which statements best describes the concept of a binding price ceiling? Assume that the equilibrium price of gasoline is $3.00 per gallon. The government has instituted a legal minimum price of $1.80 per gallon for gasoline. The government prohibits gas stations from selling gasoline for more than $1.8 B. There is a shortage of rental cars at the equilibrium... show more Which statement best describes the concept of a price ceiling? Assume that the equilibrium price of rental car is $50 per day? A. There are many teenages who would like to work at car rental companies, but they are not hried due to minimum-wage laws. Answers. Best Answer: Price ceilings do create shortages, but not at the equilibrium price. Therefore, the answer is C. because a price ceiling is the legal maximum that companies can charge for a good. If the government says that car rental companies cannot charge more than $20 per day (the legal maximum) for a rental, they are setting a price ceiling. Which of the following statements best describes the concept of a price floor? A. The local goverment ha instituted a legal minumum price of $2.00 each for donuts. Which statement best describes the concept of a binding price ceiling? Assume that the equilibrium price of gasoline is 3$ per litre? The government prohibits gas stations from selling gasoline for more than 1.80$ per litre.
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which statement best describes the concept of binding price ceiling