The market for apples is in equilibrium at a price of $0.50 per pound.If the government imposes a price ceiling in the market at $0.40 per pound:
A)quantity demanded will decrease.
B)quantity supplied will increase.
C)there will be a shortage of the good.
D)the price ceiling will not affect the market price or output.

Question

Quizplus · Accepted Answer

Since the price ceiling is below the equilibrium price, the quantity demanded will increase while the quantity supplied will decrease. This causes a shortage of the good, since demand now exceeds supply at the new price ceiling.

The Market for Apples Is in Equilibrium at a Price