The government might enact a price ceiling in order to accomplish what?

Question

The government might enact a price ceiling in order to accomplish what?

A. Get out of debt

B. Protect the poor

C. Prevent rationing

D. Increase supply

Answer 1

(E) Enact a Socialist Policy to control the Commanding Heights of the Economy in a futile effort to create a utopia.

Answer 2

The correct option is: B. Protect the poor

(though price celing if effective may  help avoid intrucing rationing  - the seconf best alternative.C. Prevent rationing. Alternative A is clearly wrong as price ceiling does not help getting out of debt  and alternative D is just the opposite of what price ceiling will do.]

Answer 3

Protect the poor. Consumers know that the maximum price they can be charged is below the equilibrium price.

However, price ceilings cause problems because they cause excess demand in the market. If the price is too low, equilibrium is not reached and demand is greater than supply.