Normally, when a governmental price control affects the price, it can be expected to result in a
A)reduction in the number of units purchased only when the price is forced down.
B)reduction in the number of units purchased when the price is forced down and an increase number of units purchased when the price is forced up.
C)decrease in the number of units purchased when the price is forced up or down.
D)increase in the number of units purchased when the price is forced up or down.

Question

Quizplus · Accepted Answer

Price controls typically create either a surplus or a shortage of goods. If a price ceiling is set below the equilibrium price, the price is forced down and the quantity demanded increases while the quantity supplied decreases, leading to a shortage of goods. On the other hand, if a price floor is set above the equilibrium price, the price is forced up and the quantity supplied increases while the quantity demanded decreases, leading to a surplus of goods. Thus, price controls usually reduce the number of units purchased whether the price is forced up or down.

Normally, When a Governmental Price Control Affects the Price, It