If a price ceiling is set above the equilibrium price, then
A) there will be neither a shortage nor a surplus of the good.
B) the price ceiling affects suppliers but not demanders.
C) the price ceiling will generate revenue for the government.
D) there will be a shortage of the good.
E) there will be a surplus of the good.

Question

Quizplus · Accepted Answer

When a price ceiling is set above the equilibrium price, it does not affect the market because the market price is already lower than the ceiling. Therefore, the market operates as if there were no ceiling, with no shortage or surplus created by the ceiling itself.

If a Price Ceiling Is Set Above the Equilibrium Price