If the government required the actual market price to be fixed at $6 per unit in Figure 3.2, Figure 3.3 Shifts of Supply and Demand

Question

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If the government sets a fixed price of $6 per unit, which is below the equilibrium price of $8, it would result in a binding or effective price ceiling. This means that the quantity demanded would exceed the quantity supplied, leading to a shortage in the market. Sellers would not be willing to supply the same quantity of goods at a lower price, and buyers would increase their demand due to the lower price. Therefore, a binding price ceiling would result in a market distortion, and the market would not reach equilibrium.

If the Government Required the Actual Market Price to Be