Governments occasionally get involved in creating a market equilibrium by setting a maximum price that is less than the equilibrium price,resulting in a permanent excess demand for the products.

Question

Quizplus · Accepted Answer

This statement is true. When a government sets a maximum price lower than the equilibrium price, it creates a situation where there is excess demand for the product. This is because consumers are willing to buy more of the product than suppliers are willing to sell at the lower price. This can lead to problems such as shortages, rationing, and black markets.

Governments Occasionally Get Involved in Creating a Market Equilibrium by Setting