Which of the following results from a price ceiling?
i.increased search activity
ii.surplus
iii.black market
A) i only
B) i and iii
C) ii and iii
D) i, ii, and iii
E) ii only

Question

Quizplus · Accepted Answer

A price ceiling sets a maximum price that can be charged for a good or service. This can lead to increased search activity (i) as consumers search for alternative sources of the good or service at a lower price. It can also lead to a surplus (ii) of the good or service as suppliers are unable to charge a higher price in order to cover their costs of production. Finally, price ceilings often lead to the emergence of a black market (iii) for the good or service, as suppliers seek to sell at a higher price while buyers are willing to pay the higher price to obtain the good or service. Therefore, the correct answer is B, which includes both (i) and (iii).

Which of the Following Results from a Price Ceiling