Assume a price ceiling is imposed at the current equilibrium price in the market for wheat.If the supply of wheat then decreases as a result of bad weather, then:
A)a surplus of wheat will be created.
B)a shortage of wheat will be created.
C)the quantity of wheat traded remains the same.
D)the quantity of wheat supplied will increase.
E)There is insufficient information to answer this question.

Question

Quizplus · Accepted Answer

With the price ceiling at the current equilibrium price, the quantity demanded exceeds the quantity supplied. But with the decrease in supply due to bad weather, the shortage of wheat will be further exacerbated. Therefore, the correct choice is (B) - a shortage of wheat will be created.

Assume a Price Ceiling Is Imposed at the Current Equilibrium