Why do price ceilings tend to cause persistent imbalances in the market?
A)Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage.
B)Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus.
C)Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage.
D)Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus.

Question

Quizplus · Accepted Answer

Price ceilings, set below the equilibrium price, prevent prices from rising to the equilibrium level where quantity supplied equals quantity demanded. This results in a shortage because the quantity demanded at the artificially low price exceeds the quantity suppliers are willing to provide.

Why Do Price Ceilings Tend to Cause Persistent Imbalances in the Market