Suppose the government sets a price ceiling. Which of the following will result?

Question

Quizplus · Accepted Answer

A price ceiling is a maximum price that can be charged for a product or service. If the ceiling is set below the equilibrium price, there will be excess demand for the product, resulting in a shortage. Therefore, option B is the correct answer. Option A is incorrect because if the quantity supplied is greater than the quantity demanded, there would be a surplus. Option C is also incorrect because if there is a surplus, it means the quantity supplied exceeds the quantity demanded. Option D is incorrect because it assumes the equilibrium price, which may not be the case with a price ceiling in place.

Suppose the Government Sets a Price Ceiling