A price ceiling set below the equilibrium price creates a shortage.

Question

​A price ceiling set below the equilibrium price creates a shortage.

Quizplus · Accepted Answer

When the price ceiling is set below the equilibrium price, it means that the price is artificially kept lower than the market price. As a result, the quantity demanded increases, while the quantity supplied decreases. This situation leads to a shortage of goods because the demand exceeds the supply, and some consumers cannot buy the product or get it in a black market, where prices might be higher.

​A Price Ceiling Set Below the Equilibrium Price Creates a Shortage

A Price Ceiling Set Below the Equilibrium Price Creates a Shortage