Question

current objective
explain the impact of price ceilings and usury laws in the financial markets

question
suppose the market for credit cards is currently in equilibrium. what will be the consequence if the government sets a limit
on credit card interest rates that is above the market equilibrium?

select the correct answer below:

a surplus

a shortage

more people wanting credit cards than lenders wanting to supply them.

nothing

Explanation:

A price ceiling is a legal maximum price. If the price ceiling (limit on credit - card interest rates) is set above the market equilibrium, it is non - binding. At the market equilibrium, the quantity demanded equals the quantity supplied. Since the ceiling is above the equilibrium, the market can still operate at the equilibrium. A surplus occurs when price is above equilibrium (but the ceiling is not binding here). A shortage and "more people wanting credit cards than lenders wanting to supply them" (which is a shortage situation) occur when price is below equilibrium.

Answer:

Nothing.