Suppose the equilibrium price of oranges is $0.79 an orange, but government takes steps to prevent the price from exceeding $0.60 an orange. The likely result will be a:
A) lower equilibrium price for oranges as the supply curve for oranges shifts to the right.
B) higher equilibrium price for oranges as the demand curve for oranges shifts to the right.
C) shortage of oranges as the price ceiling keeps the market from reaching equilibrium.
D) surplus of oranges as the price ceiling keeps the market from reaching equilibrium.

Question

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price creates a shortage because the quantity demanded exceeds the quantity supplied at the imposed price.

Suppose the Equilibrium Price of Oranges Is $0