A price ceiling that is not a binding constraint today could cause a shortage in the future if demand were to increase and raise the equilibrium price above the fixed price ceiling.

Question

Quizplus · Accepted Answer

If demand increases in the future, the equilibrium price would rise above the fixed price ceiling, but producers cannot legally charge a price higher than the ceiling. This would result in a shortage, as quantity demanded would exceed quantity supplied at the fixed price.

A Price Ceiling That Is Not a Binding Constraint Today