If the government sets £1 as the price ceiling for a pound of sugar when the equilibrium price is £2.50, _____.
A) the number for goods used as a substitute for sugar will fall
B) sugar will have to be exported to other countries to reduce the surplus in the market
C) sellers may seek to sell sugar illegally at a price lower than the price ceiling
D) the quantity of sugar demanded will exceed the quantity supplied

Question

Quizplus · Accepted Answer

When a price ceiling is set below the equilibrium price, it results in a shortage because the quantity demanded exceeds the quantity supplied at that price.

If the Government Sets £1 as the Price Ceiling for a Pound