Asked by Christian Stephens on May 05, 2024
Verified
If a price ceiling is set below the equilibrium price,
A) quantity demanded will equal quantity supplied.
B) there will be a surplus.
C) there will be a shortage.
D) demand will be less than supply.
Price Ceiling
A price ceiling is a government-imposed limit on how high a price can be charged on a product or service, intended to protect consumers from high prices.
Equilibrium Price
The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market stability.
Shortage
A shortage occurs when the demand for a product exceeds its supply at a particular price, leading to a scarcity of the product.
- Gain insight into how price regulations set by the government influence market stability.
- Examine the effects of surplus supply and demand within marketplaces.
Verified Answer
JH
Janasa Hardy-HardinMay 08, 2024
Final Answer :
C
Explanation :
When a price ceiling is set below the equilibrium price, it causes the price to be lower than what the market would naturally set, leading to a higher quantity demanded than quantity supplied. This discrepancy results in a shortage.
Learning Objectives
- Gain insight into how price regulations set by the government influence market stability.
- Examine the effects of surplus supply and demand within marketplaces.