Demonstrate graphically and explain verbally the impact on supply and demand equilibrium of an effective price ceiling.

Name: Demonstrate graphically and explain verbally the impact on supply and demand equilibrium of an effective price ceiling.
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Question

Quizplus · Accepted Answer

The Answer is The imposition of an effective price ceiling (P_C) will result in a price that is lower than the market equilibrium price (P_C < P_E) and will also cause a shortage (Q_D > Q_S).
The diagram:

The imposition of an effective price ceiling (P<sub>C</sub>) will result in a price that is lower than the market equilibrium price (P<sub>C</sub> < P<sub>E</sub>) and will also cause a shortage (Q<sub>D</sub> > Q<sub>S</sub>). The diagram:

Demonstrate Graphically and Explain Verbally the Impact on Supply and Demand