Which of the following statements about a binding price ceiling is true?

Question

Quizplus · Accepted Answer

A binding price ceiling sets the price below the equilibrium price, creating excess demand (or a shortage) in the market. In the short run, the shortage is greater as consumers are still willing to buy the same quantity at the lower price, but suppliers cannot increase their output immediately. However, in the long run, suppliers can adjust their output and possibly exit the market, leading to a greater shortage. Therefore, option D is the correct statement.

Which of the Following Statements About a Binding Price Ceiling