The market for oranges is in equilibrium at a price of $2.00 per pound. If the government imposes a price ceiling on oranges of $1.00 per pound:
A)quantity demanded will decrease.
B)quantity supplied will increase.
C)there will be a shortage for the good.
D)there will be a surplus of the good.

Question

Quizplus · Accepted Answer

A price ceiling below the equilibrium price creates a situation where the quantity demanded exceeds quantity supplied, resulting in a shortage of the good. In this case, the price ceiling of $1.00 is below the market equilibrium price of $2.00, meaning that demand will increase but the supply will decrease, leading to a shortage.

The Market for Oranges Is in Equilibrium at a Price