Question

Suppose the demand for classical music concert tickets is downward sloping and the supply of classical music concert tickets is upward sloping. lovers of classical music persuade congress to impose a price ceiling of $40 per concert ticket. true or false: if the equilibrium price of concert tickets were $50, a price ceiling of $40 will cause more people to attend classical music concerts than if there is no price control.

Answer 1

Price ceiling is an economic term that describes the situation in which the government imposes a legal maximum on the price of a good. If the price ceiling is below the equilibrium price, the price ceiling causes a shortage in the market. So, if the equilibrium price is $40 or below, a price ceiling of $40  has no effect on the number of people attending musical concerts. But, if the equilibrium price in the absence of price controls is above $40 per ticket, then imposing a price ceiling of $40 will cause quantity demanded to exceed quantity supplied. This will result in a shortage of tickets and a decrease in the number of people who attend classical music concerts.