When a price ceiling is in effect:
A) some mutually beneficial trades between buyers and sellers do not occur.
B) no mutually beneficial trades between buyers and sellers occur.
C) all mutually beneficial trades between buyers and sellers occur.
D) it is impossible to say if any, some, or all beneficial trades between buyers or sellers fail to occur.

Question

Quizplus · Accepted Answer

When a price ceiling is in effect, it means that a maximum price has been set lower than the market equilibrium price. This can lead to a shortage of the good or service, as the quantity demanded exceeds the quantity supplied at that price. In this situation, some buyers who are willing to pay a higher price than the ceiling are not able to purchase the good or service, and some sellers who would be willing to supply the goods at a higher price than the ceiling are not willing to do so. As a result, some mutually beneficial trades between buyers and sellers do not occur.

When a Price Ceiling Is in Effect