If the government imposes a maximum price that is above the equilibrium price,
A) this maximum price will have no economic impact.
B) quantity demanded will be less than quantity supplied.
C) demand will be greater than supply.
D) the available supply will have to be rationed with a nonprice rationing mechanism.

Question

Quizplus · Accepted Answer

When a maximum price is set above the equilibrium price, it does not affect the market because the market can still function at the equilibrium price, which is lower than the imposed maximum. Thus, there is no impact on the supply and demand balance.

If the Government Imposes a Maximum Price That Is Above