After a natural disaster, a binding price ceiling on bottled water will lead to:

Question

Quizplus · Accepted Answer

A binding price ceiling would mean that the price of bottled water is artificially held below the market equilibrium price. This would lead to a surge in demand for bottled water and a decrease in the supply of bottled water as suppliers would have little incentive to produce more at the artificially low price. This results in a shortage of bottled water, with demand outstripping supply.

After a Natural Disaster, a Binding Price Ceiling on Bottled