Suppose the government decides to implement a maximum price level on vegetables. The effect will be to:
A) increase the quantity demanded of vegetables
B) decrease the demand for vegetables
C) increase the quantity of vegetables supplied
D) lead to a new equilibrium price and output level

Question

Quizplus · Accepted Answer

A maximum price level, or price ceiling, set below the equilibrium price will lead to an increase in the quantity demanded as consumers will want to buy more at the lower price.

Suppose the Government Decides to Implement a Maximum Price Level