Say that the equilibrium price of natural gas would be $5 per thousand cubic feet, but there is a price ceiling imposed at $3 per thousand cubic feet.That price ceiling is then lowered to $2 per thousand cubic feet.As a result,
A)the shortage of natural gas will get worse.
B)the shortage of natural gas will get less severe.
C)the surplus of natural gas will get worse.
D)the surplus of natural gas will get less severe.
E)the shortage of natural gas will be eliminated.

Question

Quizplus · Accepted Answer

When the price ceiling is lowered, it creates a greater difference between the market price and the ceiling price. In this case, the market equilibrium price is $5, but the ceiling price is $2. Thus, there is a greater incentive for buyers to purchase at the lower price, but less incentive for sellers to supply at the lower price, resulting in a shortage.

Say That the Equilibrium Price of Natural Gas Would Be