Suppose that the average cost of an ophthalmologist visit is $150. If the government imposes a price ceiling of $80 on the cost of an ophthalmologist visit, there will be:
A)an excess availability of time slots for ophthalmologist visits.
B)a shortage for ophthalmologist visits.
C)an increase in the equilibrium number of ophthalmologist visits.
D)no change in the number of ophthalmologist visits.

Question

Quizplus · Accepted Answer

A price ceiling below the equilibrium price creates a shortage, where the quantity demanded exceeds the quantity supplied. In this case, the price ceiling of $80 is below the average cost of $150, so ophthalmologists may choose to limit the number of patients they see, resulting in fewer appointments available and a shortage.

Suppose That the Average Cost of an Ophthalmologist Visit Is