The government decides to impose a price ceiling on a good because it thinks that the market-determined price is too high.If the government imposes the price ceiling below the equilibrium price:
A) consumers will respond to the lower price and wish to purchase more of the good than at the equilibrium price.
B) producers will respond to the lower price and offer more units for sale.
C) consumers will be able to purchase more of the good after the price ceiling is imposed.
D) it will not be binding.

Question

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price will lead to a shortage as consumers will want to buy more at the lower price, but producers will supply less.

The Government Decides to Impose a Price Ceiling on a Good