A binding price ceiling will result in ________.

Question

Quizplus · Accepted Answer

A binding price ceiling means that the maximum price allowed by law is lower than the market equilibrium price. This will result in a shortage of the good/service, which in turn causes the quantity supplied to be lower than the quantity demanded. Thus, a binding price ceiling leads to deadweight loss since neither supply nor demand is completely inelastic. Option B, C, and D are incorrect as they do not align with the concept of a binding price ceiling.

A Binding Price Ceiling Will Result in ________