When government intervenes in a competitive market by imposing an effective price ceiling, we would expect the quantity supplied to ________ and the quantity demanded to ________.
A) fall; rise
B) fall; fall
C) rise; rise
D) rise; fall

Question

Quizplus · Accepted Answer

An effective price ceiling, set below the market equilibrium price, causes the quantity supplied to fall (as producers are less willing to supply at a lower price) and the quantity demanded to rise (as consumers demand more due to the lower price), leading to a shortage.

When Government Intervenes in a Competitive Market by Imposing an Effective