If the government sets a price ceiling of Rs150 per litre on petrol while the market equilibrium price is Rs100 per litre, which of the following statements is accurate?

Prices, Wages & Taxes MCQs for PPSC, FPSC, NTS, and Pakistan government job tests. Select an option below, then read the explanation.

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Subject
Prices, Wages & Taxeseconomics-mcqs › prices-wages-taxes
Published
30 May 2019
Last updated
28 May 2026

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Explanation

When the price ceiling is set above the equilibrium price, it is initially non-binding. However, if demand for petrol increases significantly, the ceiling could become a binding constraint by preventing prices from rising above Rs150, thus limiting market adjustments.

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