If the free-market equilibrium price for some product is $25,then a legal price ceiling set at $15 will bring about
A)the same general effects as a price ceiling of $25.
B)the same general effects as an equilibrium price of $15.
C)no change in the market outcomes.
D)a surplus of the good.
E)a shortage of the good.

Question

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price leads to a shortage of the product as the quantity demanded exceeds the quantity supplied at the lower price. In this case, a $15 price ceiling is below the free-market equilibrium price of $25, so there will be a shortage of the good.

If the Free-Market Equilibrium Price for Some Product Is $25,then