Suppose a market is in equilibrium.If a price ceiling is set by the government below the equilibrium price,which of the following is most likely to happen?

Question

Quizplus · Accepted Answer

If a price ceiling is set below the equilibrium price, it means that the maximum price that can be charged for the good is lower than the price that the market would naturally settle at. This creates a situation where the quantity demanded exceeds the quantity supplied, creating a shortage of the good. Consumers are willing to buy more of the good at the lower price, but producers are not willing to supply as much at that lower price. As a result, there will be shortages in the market.

Suppose a Market Is in Equilibrium