A price ceiling
A) creates market efficiency by making a good cheaper.
B) helps all producers by increasing the price of the good.
C) can create a black market for the good.
D) reduces search activity.
E) benefits all people who want to buy the good.

Question

Quizplus · Accepted Answer

Price ceilings are government-imposed limits on how high a price can be charged for a good or service. When a price ceiling is set below the equilibrium price, it creates a shortage of the good. This shortage creates an incentive for people to find ways to get the good, even if it means buying on a black market where the price is higher. Therefore, price ceilings can create a black market for the good.

A Price Ceiling