Question 5
Price DeterminationPrice control indicates the following
- A.price is fixed at equilibrium level
- B.price is fixed above equilibrium level
- C.price is not fixed but is determined by supply and demand
- D.price is fixed below equilibrium level
- E.none of the above.
Show the answer and explanation
Answer: D (price is fixed below equilibrium level)
Explanation
Price control usually means government sets a maximum price below the equilibrium price to protect consumers.