When a price ceiling below the equilibrium price is imposed on a good,production of the good
A) increases.
B) decreases.
C) does not change.
D) is frozen at the pre-ceiling level.
E) either increases or decreases depending on whether the supply of the good increases or decreases when the price ceiling is imposed.

Question

Quizplus · Accepted Answer

When a price ceiling below the equilibrium price is imposed on a good, it makes the price of the good lower than it would be otherwise. Producers may not find it profitable to produce as much of the good at the lower price, leading to a decrease in production.

When a Price Ceiling Below the Equilibrium Price Is Imposed