Suppose the market equilibrium price of corn is $5 per bushel, and the government sets a price ceiling of $4 per bushel. What is the most likely result of this action?
A) There will be a shortage of corn.
B) There will be a surplus of corn.
C) There will be a decrease in the quantity of corn demanded as the result of the price ceiling.
D) There will be an increase in the quantity of corn supplied as the result of the price ceiling.

Question

Quizplus · Accepted Answer

A price ceiling set below the market equilibrium price typically results in a shortage because the lower price increases quantity demanded but decreases quantity supplied.

Suppose the Market Equilibrium Price of Corn Is $5 Per