A persistent shortage may occur if:
A)the government imposes a price ceiling below the equilibrium price.
B)the government imposes a price floor below the equilibrium price.
C)demand keeps falling.
D)supply shifts rightward.

Question

Quizplus · Accepted Answer

When the government imposes a price ceiling below the equilibrium price, it means that the maximum price at which a good or service can be sold is lower than the price at which the market is willing to buy. This creates a shortage as the quantity demanded exceeds the quantity supplied at that lower price, and suppliers are not motivated to produce more. As a result, there is a persistent shortage.

A Persistent Shortage May Occur If