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A government sets a legal maximum on the price of an apartment rental. What is the technical term for this kind of price control, and can a landlord legally charge more than it?
AA price floor; landlords may not charge less than it
BA price ceiling; landlords may not charge more than it
CA price floor; landlords may not charge more than it
DA price ceiling; landlords may not charge less than it
Answer & Solution
Correct answer: B. A price ceiling; landlords may not charge more than it
1. A price ceiling is defined as a legal maximum price.
2. By keeping price from rising above a set level, it caps how much a seller may legally charge.
3. A price floor works the opposite way, setting a legal minimum price instead.
4. So options A and C, which describe a floor, name the wrong control.
_Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 3 "Demand and Supply", section 3.4 | Price Ceilings and Price Floors_
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