Suppose a price ceiling is set by the government below the market equilibrium price. Which of the following will result?
A) The demand curve will shift to the left.
B) The quantity demanded will exceed the quantity supplied.
C) The quantity supplied will exceed the quantity demanded.
D) There will be a surplus.

Question

Quizplus · Accepted Answer

Setting a price ceiling below the market equilibrium price will result in excess demand or a shortage. Because the price is below the market-clearing price, quantity demanded will exceed the quantity supplied, thereby resulting in a shortage. Therefore, option B is the correct answer.

Suppose a Price Ceiling Is Set by the Government Below