The major drawback of a price ceiling is
A)it causes a surplus.
B)government regulations of this kind are difficult to enforce.
C)it causes a shortage.
D)There is no drawback.

Question

Quizplus · Accepted Answer

A price ceiling sets a maximum price limit for a product or service, which could be lower than its equilibrium price. This creates excess demand, leading to a shortage in the market, as the demand exceeds the supply. This shortage can lead to several negative consequences like rationing, black markets, and reduced quality of goods and services. Therefore, the major drawback of a price ceiling is that it causes a shortage.

The Major Drawback of a Price Ceiling Is