In a market where government has set the maximum price below the equilibrium price, one might expect:
A)quantity demanded to equal quantity supplied.
B)excess supply.
C)a black market to develop as individuals try to take advantage of unexploited opportunities.
D)quantity supplied to surpass quantity demanded.

Question

Quizplus · Accepted Answer

When the government sets a maximum price below the equilibrium price, it creates a price ceiling, leading to a shortage as quantity demanded exceeds quantity supplied. This often results in a black market where goods are sold at higher prices.

In a Market Where Government Has Set the Maximum Price