Question

Do all buyers benefit from a binding price ceiling?

(A) Yes. A binding price ceiling benefits all buyers because it allows them to obtain the good in the legal market.
(B) No. A binding price ceiling benefits only some buyers because not all are able to obtain the good in the legal market.
(C) No. A binding price ceiling benefits no buyers because sellers are unwilling to sell any of their products.
(D) No. A binding price ceiling benefits only some buyers because, although the price is initially lower, it eventually increases to the equilibrium price.
(E) No. A binding price ceiling benefits no buyers because they are unwilling to buy any of the products at a price higher than the equilibrium.

Answer 1

Option B.

No, a binding price ceiling benefits only some buyers because not all are able to obtain the goods in the legal market.

Step-by-step explanation:

A binding price ceiling occurs when the government sets a required price on a good or goods at a price below equilibrium. Since the government requires that prices not rise above the price, that price binds the market for that good. Because the government keeps the price artificially low, businesses will not produce enough of those goods to satisfy the market.

This results in an insufficient supply of those goods, creating a shortage in those goods, and with a shortage of goods, only some of the buyers will be able to obtain the goods in the legal market.

Therefore, the option that best suits the question is option, B. Not all buyers benefit from a binding price ceiling. A BINDING PRICE CEILING BENEFITS ONLY SOME BUYERS BECAUSE NOT ALL ARE ABLE TO OBTAIN THE GOOD IN THE LEGAL MARKET.