-Suppose a price ceiling is set above the equilibrium price. Now suppose that policy makers decide to raise the price ceiling. This increase in the price ceiling will cause which of the following to occur?
A) The surplus in the market will increase.
B) The surplus in the market will decrease.
C) The shortage in the market will increase.
D) none of the above

Question

-Suppose a price ceiling is set above the equilibrium price. Now suppose that policy makers decide to raise the price ceiling. This increase in the price ceiling will cause which of the following to occur?
A) The surplus in the market will increase. 
B) The surplus in the market will decrease. 
C) The shortage in the market will increase. 
D) none of the above

Quizplus · Accepted Answer

Since the price ceiling is set above the equilibrium price, it is not binding and has no effect on the market. Raising it further will also have no effect on the market conditions such as surplus or shortage.

-Suppose a Price Ceiling Is Set Above the Equilibrium Price