If a price ceiling is to be effective,it should be set
A)Below the equilibrium price,and it will create a market shortage.
B)Below the equilibrium price,and it will create a market surplus.
C)Above the equilibrium price,and it will create a market shortage.
D)Above the equilibrium price,and it will create a market surplus.

Question

Quizplus · Accepted Answer

A price ceiling is a government-imposed limit on how high a price can be charged for a good or service. If the price ceiling is set below the equilibrium price, it will create a shortage because demand for the good will exceed the quantity supplied at that price. This will lead to consumers being unable to purchase the good they desire, potentially causing discontent and unfairness in the market. Thus, a price ceiling must be set below the equilibrium price to be effective, but this will result in a shortage.

If a Price Ceiling Is to Be Effective,it Should Be