Question

Which situation would MOST LIKELY result in an increase in quantity demanded?
А
The government imposes a price ceiling for product that is lower than the equilibrium price.
B
The government imposes a price ceiling for Product X that is higher than the equilibrium price.
С
The government imposes a price floor for Product X that is lower than the equilibrium price.
D
The government imposes a price floor for Product X that is higher than the equilibrium price.

Answer 1

Answer:

A shortage in the market

Explanation:

Most likely the result of a price ceiling being set below the equilibrium price

Answer 2

The circumstance that is most probable to cause an increase in the quantity demanded would be:

B). The government imposes a price ceiling for Product X that is higher than the equilibrium price.

• 'Price ceiling' is described as the maximum price limit set by the government for a specific good so that its price doesn't reach beyond it.
• While 'Price floor' is the minimum price limit at which a good can be sold so that it doesn't reach a price below it.
• As per the given situation, establishing a 'price ceiling' for a good with a price more than the equilibrium price would help in enhancing its demand.
• The reason behind this is that the price ceiling would set the price of the good at equilibrium back and thus, the price of the good would decrease and the consumers would be willing to purchase more at that price.

Hence, option B is the correct answer.

Learn more about 'price equilibrium' here:

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