Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in

Question

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price creates a shortage, not a surplus, as the quantity demanded exceeds the quantity supplied. This leads to a deadweight loss due to the inefficient allocation of resources.

Assume That Your State Government Has Placed a Price Ceiling