Question

Suppose that the average cost of a doctor visit is $100. If the government imposes a price ceiling of $50 on the cost of a doctor visit, there will be:

Answer 1

there will be excess demand of doctor visits

Step-by-step explanation:

Price ceiling is a regulation by the government to keep a good or service to be sold at or below a certain price limit. This means that the government is keeping the price from rising above a certain level. The main reason why a government would do that is to protect consumers from being exploited through being charged exorbitant prices. In this case, limiting the cost of doctors visit to $50 max from the average $100 will lead to excess demand by customers.