The major drawback of a price ceiling is
A)it causes a surplus.
B)government regulations of this kind are difficult to enforce.
C)it causes a shortage.
D)there is no drawback.

Question

Quizplus · Accepted Answer

A price ceiling is the maximum amount that can be charged for a good or service, set below the equilibrium price. This tends to lead to a shortage, as quantity demanded exceeds quantity supplied. Due to the lower price, suppliers may not want to supply as much, while at the same time, buyers are incentivized to demand more. This results in an excess demand or shortage of the good or service in question.

The Major Drawback of a Price Ceiling Is