The government imposes a price ceiling below the equilibrium price.The price ceiling will cause:
A)demand to decrease.
B)supply to increase.
C)a shortage of the good.
D)an increase in the quality of the good.

Question

Quizplus · Accepted Answer

When the government imposes a price ceiling below the equilibrium price, it creates a situation where the quantity demanded exceeds the quantity supplied. This leads to a shortage of the good, as consumers try to buy more of the product, but producers are unwilling to supply it at the artificially low price. The other choices are not accurate as a price ceiling does not directly impact demand or the quality of the good, and it is unlikely to increase supply.

The Government Imposes a Price Ceiling Below the Equilibrium Price