If a government-imposed price ceiling causes the observed price in a market to be below the equilibrium price,
A) there will be excess demand.
B) there will be excess supply.
C) the curves will shift to make a new equilibrium at the regulated price.
D) None of the above.

Question

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price creates excess demand, as quantity demanded exceeds quantity supplied at the regulated price. This can lead to market inefficiencies, such as black markets and rationing.

If a Government-Imposed Price Ceiling Causes the Observed Price in a Market