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a price ceiling

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA BT – FIA FBT › a price ceiling

  • This topic has 1 reply, 2 voices, and was last updated 7 months ago by Ken Garrett.
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  • November 23, 2021 at 9:32 am #641376
    Nhung23082003
    • Topics: 5
    • Replies: 1
    • ☆

    Question: A price ceiling set above the equilibrium market price will result in:
    A, Market failure
    B, Excess supply over demand
    C, Market equilibrium
    D, Excess demand over supply
    why not the answer B?
    (because I think that: A price ceiling set above the equilibrium market price ==> minimum prices ==> excess supply over demand)?
    May you explain to me?

    November 23, 2021 at 8:06 pm #641410
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 9975
    • ☆☆☆☆☆

    Say that without the price ceiling the equilibrium price is €20 per unit. This is where the buyer and seller both volunteer to operate so that demand = supply.

    A price ceiling of €25 is then set. That will make no diference to the buyers’ and sellers’ original decision.

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