Suppose the government imposes a price ceiling above the equilibrium price of a given good.Which of the following is the most likely result?
A) Some other rationing device will emerge to allocate the good among buyers.
B) Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling.
C) No change will occur in the market.
D) Brute force will be used to allocate the good among buyers.
E) a,b,and d

Question

Quizplus · Accepted Answer

When a price ceiling is set above the equilibrium price, it does not affect the market because the market price is already lower than the ceiling. Therefore, there's no restriction on the price that would alter the market's natural equilibrium, leading to no change in the market dynamics.

Suppose the Government Imposes a Price Ceiling Above the Equilibrium