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26 April, 15:59

In one version of the experiment, the professor plans to put a ceiling of $11 on prices. That is, no one will be permitted to submit a bid or an asking price greater than $11. Will this be a binding price ceiling? That is, will the price ceiling affect the prices that buyers and sellers agree to when they trade?

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Answers (1)
  1. 26 April, 19:05
    0
    no

    Explanation:

    given data

    ceiling = $11

    solution

    we know here professor is planing put ceiling = $11 on prices

    but no one is permitted submit bid greater than of $11

    so we know at price = $11 most of the consumer will be able to buy product

    and market actually clear at $10

    so cost to producer fall below = $11

    hence the price ceiling at $11 here it will not be binding
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