The following figure illustrates the demand and supply curves for a good.

-Refer to the figure above.Which of the following is likely to happen if a price control below the equilibrium price is imposed?
A) Quantity supplied will exceed quantity demanded.
B) Quantity demanded will exceed quantity supplied.
C) Consumer surplus will decrease.
D) Producer surplus will increase.

Question

The following figure illustrates the demand and supply curves for a good.
 
-Refer to the figure above.Which of the following is likely to happen if a price control below the equilibrium price is imposed?
A) Quantity supplied will exceed quantity demanded. 
B) Quantity demanded will exceed quantity supplied. 
C) Consumer surplus will decrease. 
D) Producer surplus will increase.

Quizplus · Accepted Answer

If a price control below the equilibrium price is imposed, the quantity demanded will increase, but the quantity supplied will decrease, leading to a shortage. Therefore, quantity demanded will exceed quantity supplied. Consumer surplus may increase, but producer surplus will decrease since suppliers will not be able to sell all of their products at the price control level. However, neither of these effects are listed as answer choices.

The Following Figure Illustrates the Demand and Supply Curves for a Good