Question

The equilibrium price is $10. to make helmets more affordable, the government imposes a price ceiling of $6. thus, the full economic price due to the price ceiling is

A) $6

B) $10

C) $4

D) $16

Answer 1

The full economic price due to a government-imposed price ceiling remains at the equilibrium price, which in this case is $10, despite the ceiling being set at $6.

Step-by-step explanation:

When the government imposes a price ceiling on a product to make it more affordable, such as setting the price of helmets from an equilibrium price of $10 down to $6, this does not change the full economic price of the product. The full economic price remains at the equilibrium price, which is where the quantity demanded by consumers equals the quantity supplied by producers, and in this case, it is $10. The price ceiling only makes it illegal to sell the product above the set price, in this case, $6. So, the full economic price due to the price ceiling is option B) $10.