When an effective price ceiling is in place:

Question

Quizplus · Accepted Answer

When an effective price ceiling is in place, the maximum legal price is below the market equilibrium price. This leads to a shortage of the product, as quantity demanded exceeds quantity supplied at this maximum price. As a result, some consumers who are able to purchase the product at the price ceiling are better off, while others who are unable to find the product or must pay a higher price on the black market are worse off. The net change in consumer surplus is not necessarily zero, as some consumers gain while others lose.

When an Effective Price Ceiling Is in Place