If a legal price ceiling is set above the equilibrium price:

Question

Quizplus · Accepted Answer

A legal price ceiling set above the equilibrium price will not have any impact on the equilibrium price or quantity. This is because the market is already operating efficiently and any attempts to set prices artificially will not result in a change in the equilibrium point. Therefore, neither a shortage nor a surplus of the product will occur and there will be no incentive for a black market to evolve.

If a Legal Price Ceiling Is Set Above the Equilibrium