The table given below reports the quantity demanded and supplied of a commodity at different prices in a market.Table 3.5

-In a market where the price is restricted by price floors or price ceilings,
A)all sellers will be able to sell everything they produce.
B)surpluses and shortages will exist.
C)all buyers will get what they want.
D)disequilibrium will automatically correct itself.
E)surpluses and shortages will put pressure on the price to move to its equilibrium.

Question

The table given below reports the quantity demanded and supplied of a commodity at different prices in a market.Table 3.5
 
-In a market where the price is restricted by price floors or price ceilings,
A)all sellers will be able to sell everything they produce. 
B)surpluses and shortages will exist. 
C)all buyers will get what they want. 
D)disequilibrium will automatically correct itself. 
E)surpluses and shortages will put pressure on the price to move to its equilibrium.

Quizplus · Accepted Answer

Price floors and ceilings disrupt the natural market equilibrium, leading to surpluses (when the price is set above equilibrium) and shortages (when the price is set below equilibrium), as they prevent the price from adjusting to its natural equilibrium level where supply equals demand.

The Table Given Below Reports the Quantity Demanded and Supplied