Price ceilings will likely
A)result in the accumulation of surpluses.
B)increase the volume of transactions as we move along the demand curve.
C)increase production as producers respond to higher consumer demand at the low ceiling price.
D)result in the development of black markets.

Question

Quizplus · Accepted Answer

Price ceilings create a situation where the market price is lower than the equilibrium price, leading to an excess demand that cannot be met by the reduced supply. The resulting shortage creates a black market where buyers and sellers transact at a price higher than the legally imposed ceiling. This black market activity is a side effect of the price ceiling and is likely to occur as long as the ceiling remains in place.

Price Ceilings Will Likely