A price ceiling in the market for gasoline that is below the equilibrium price will lead to
A) the quantity demanded of gasoline exceeding the quantity supplied.
B) an increase in the demand for gasoline.
C) a decrease in the supply of gasoline.
D) the quantity supplied of gasoline exceeding the quantity demanded.
E) no change in the market since the price ceiling is below the equilibrium price.

Question

Quizplus · Accepted Answer

A price ceiling below the equilibrium price means that the price cannot increase to the market-clearing price determined by supply and demand. As a result, the quantity demanded will exceed the quantity supplied, leading to a shortage. In this case, buyers will be willing to purchase more gasoline at the below-equilibrium price than sellers are willing to supply. Therefore, the correct answer is A.

A Price Ceiling in the Market for Gasoline That Is