When a price is set by law or regulation below the equilibrium value,
A) a surplus develops.
B) it is called a price ceiling.
C) the legal price is the minimum price allowable.
D) it is called a price floor.
E) quantity supplied exceeds quantity demanded.

Question

Quizplus · Accepted Answer

When a price is set by law or regulation below the equilibrium value, it is called a price ceiling. This leads to a situation where the legally allowed price is lower than the market price, creating a shortage of the product.

When a Price Is Set by Law or Regulation Below