Say that the equilibrium price of natural gas would be $5 per thousand cubic feet, but there is a price ceiling imposed at $3 per thousand cubic feet. That price ceiling is then lowered to $2 per thousand cubic feet. As a result,
A)the shortage of natural gas will get worse.
B)the shortage of natural gas will get less severe.
C)the surplus of natural gas will get worse.
D)the surplus of natural gas will get less severe.

Question

Say that the equilibrium price of natural gas would be $5 per thousand cubic feet, but there is a price ceiling imposed at $3 per thousand cubic feet. That price ceiling is then lowered to $2 per thousand cubic feet. As a result,
A)​the shortage of natural gas will get worse.
B)​the shortage of natural gas will get less severe.
C)​the surplus of natural gas will get worse.
D)​the surplus of natural gas will get less severe.

Quizplus · Accepted Answer

A price ceiling at $3 per thousand cubic feet would already create a shortage because the quantity demanded exceeds the quantity supplied at that price. Lowering the price ceiling to $2 per thousand cubic feet will further reduce the quantity supplied and worsen the shortage. Therefore, the correct answer is (A) the shortage of natural gas will get worse.

Say That the Equilibrium Price of Natural Gas Would Be