Suppose a market is in equilibrium and then a price ceiling is established below the equilibrium price.Which of the following will happen?

Question

Quizplus · Accepted Answer

When a price ceiling is established below the equilibrium price, it means that the legal price cannot exceed that limit. As a result, demand would increase and supply would decrease as producers would not want to supply at a lower price. Hence, the quantity demanded will exceed the quantity supplied, leading to a shortage in the market.

Suppose a Market Is in Equilibrium and Then a Price