Asked by Roselyn Villaruz on Apr 25, 2024
Suppose a market is in equilibrium.If a price ceiling is set by the government below the equilibrium price,which of the following is most likely to happen?
A) A decline in quantity demanded
B) A surplus
C) A shortage
D) An increase in the quantity being sold
E) A new equilibrium
Price Ceiling
A maximum legal price above which a product cannot be sold; to have an impact, a price ceiling must be set below the equilibrium price.
Equilibrium Price
The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market balance.
Shortage
A market condition characterized by the demand for a product exceeding its supply, often leading to increased prices.
- Acquire an understanding of market equilibrium and the effects that price ceilings and floors have on the outcomes in the market.
- Realize the impact of official price control measures on the harmony between supply and demand.
Learning Objectives
- Acquire an understanding of market equilibrium and the effects that price ceilings and floors have on the outcomes in the market.
- Realize the impact of official price control measures on the harmony between supply and demand.