Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
A) the demand curve for physicals shifts to the right.
B) the supply curve for physicals shifts to the left.
C) the quantity demanded of physicals increases and the quantity supplied of physicals decreases.
D) the number of physicals performed will increase.

Question

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price leads to a shortage, as the quantity demanded increases due to the lower price, while the quantity supplied decreases because suppliers are less willing to provide the service at the lower price.

Suppose the Equilibrium Price of a Physical Examination ("Physical") by a Doctor