If a price ceiling is set above the equilibrium price,then
A) there will be a surplus of the good.
B) there will be a shortage of the good.
C) there will be neither a shortage nor a surplus of the good.
D) the price ceiling will generate revenue for the government.
E) the price ceiling affects suppliers but not demanders.

Question

Quizplus · Accepted Answer

When a price ceiling is set above the equilibrium price, it does not affect the market because the market price is already lower than the ceiling. Therefore, there will be neither a shortage nor a surplus of the good as the market continues to operate at equilibrium.

If a Price Ceiling Is Set Above the Equilibrium Price,then