When a price ceiling prevents a higher market price from rationing a good,
A) a surplus of the good will develop.
B) scarcity of the good will be eliminated.
C) non-price factors will play a more important role in the rationing process.
D) the future supply of the good will expand rapidly.

Question

Quizplus · Accepted Answer

When a price ceiling is imposed, it leads to a shortage because the price is kept below the equilibrium level. As a result, non-price factors such as waiting time, favoritism, or black markets may become more important in determining who gets the good.

When a Price Ceiling Prevents a Higher Market Price from Rationing