A government-imposed price ceiling set below the market's equilibrium price will create an excess demand for a product.As a result of the excess demand,either the demand curve will tend to shift to the left or the supply curve will shift to the right-or both.

Question

Quizplus · Accepted Answer

A price ceiling below equilibrium creates excess demand, but it doesn't cause the demand curve to shift left or the supply curve to shift right. Instead, it leads to shortages as quantity demanded exceeds quantity supplied.

A Government-Imposed Price Ceiling Set Below the Market's Equilibrium Price