Assume a price ceiling is imposed at the current equilibrium price in the market for wheat.If the supply of wheat then decreases as a result of bad weather,then:
A) a surplus of wheat will be created.
B) a shortage of wheat will be created.
C) the quantity of wheat traded remains the same.
D) the quantity of wheat supplied will increase.

Question

Quizplus · Accepted Answer

When a price ceiling is imposed at the current equilibrium price in the market for wheat, it will create a situation where the quantity of wheat demanded will exceed the quantity of wheat supplied, resulting in a shortage. If the supply of wheat then decreases due to bad weather, it will further exacerbate the shortage of wheat. Therefore, choice B is the correct answer.

Assume a Price Ceiling Is Imposed at the Current Equilibrium