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

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