Which of the following statements is true about price ceilings?

Question

Quizplus · Accepted Answer

Price ceilings create a situation where the legally determined price is below the market equilibrium price. This creates excess demand, leading to shortages. To allocate the limited supply of goods, rationing occurs through methods like waiting in lines, lotteries or by some other means than legally determined market prices. However, price ceilings do not necessarily create surpluses for goods or shortages for services as it depends on the specific market conditions. Ration coupons are not the only way to ration goods when price ceilings are in place.

Which of the Following Statements Is True About Price Ceilings