When the price of a good is legally set below the equilibrium level, a shortage often results. This shortage
A) is a temporary failure of the market mechanism.
B) is the result of a shift in demand.
C) is the result of a shift in supply.
D) occurs because the price ceiling prevents the market mechanism from establishing an equilibrium price.

Question

Quizplus · Accepted Answer

A shortage occurs because a price ceiling prevents the market from reaching equilibrium, where supply equals demand, leading to excess demand at the artificially low price.

When the Price of a Good Is Legally Set Below