If the government fixes the price of good X above its free- market equilibrium level,we should expect
A)a shortage of good X to occur.
B)a black market to arise for good X.
C)a surplus of good X to occur.
D)a new free- market equilibrium price to be established.
E)an excess demand for good X.

Question

Quizplus · Accepted Answer

When the government sets a price above the equilibrium level, it results in a surplus because the quantity supplied exceeds the quantity demanded at that price.

If the Government Fixes the Price of Good X Above