If the free- market equilibrium price for some product is $25, then a legal price ceiling set at $15 will bring about
A) a surplus of the good.
B) the same general effects as an equilibrium price of $15.
C) no change in the market outcomes.
D) the same general effects as a price ceiling of $25.
E) a shortage of the good.

Question

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price creates a situation where the quantity demanded exceeds the quantity supplied, resulting in a shortage of the good. In this case, a price ceiling of $15 is set below the market equilibrium price of $25, leading to a shortage.

If the Free- Market Equilibrium Price for Some Product Is