When a price ceiling is in effect, quantity ______ will be greater than quantity ______, creating a ______.
A) supplied; demanded; surplus
B) demanded; supplied; shortage
C) supplied; demanded; shortage
D) demanded; supplied; surplus

Question

Quizplus · Accepted Answer

When a price ceiling is in effect, the maximum price that can be charged for a good or service is lower than the equilibrium price. This leads to an increase in demand (quantity demanded), as buyers are attracted to the lower price. However, producers are not willing to supply as much at the lower price, as it may not cover their costs, leading to a decrease in the quantity supplied. This imbalance between demand and supply leads to a shortage, where there is excess demand and not enough supply to meet it. Therefore, option B is the correct answer, as it states that quantity demanded will be greater than quantity supplied, creating a shortage.

When a Price Ceiling Is in Effect, Quantity ______ Will