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 new free- market equilibrium price to be established.
C) a surplus of good X to occur.
D) an excess demand for good X.
E) a black market to arise 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