The law that prohibits price from reaching its equilibrium point, by enforcing a maximum that is below equilibrium is called a _____ and results in a _____.

Question

Quizplus · Accepted Answer

A price ceiling is a legal maximum price that can be charged for a good or service. If the price ceiling is set below the equilibrium price (where supply and demand intersect), there will be a shortage of the good or service. This is because the quantity demanded will be greater than the quantity supplied at the lower, mandated price.

The Law That Prohibits Price from Reaching Its Equilibrium Point