Price ceilings tend to create shortages when used to
A)bring down price in a competitive market.
B)create a price above equilibrium.
C)reduce exploitative use of market power.
D)bring down price to the level of marginal cost.

Question

Quizplus · Accepted Answer

Price ceilings, when set below the market equilibrium price, lead to shortages by increasing demand and decreasing supply, as suppliers are less willing to sell at lower prices.

Price Ceilings Tend to Create Shortages When Used to