Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,
A)a smaller quantity of the good is exchanged.
B)a smaller quantity of the good is demanded.
C)a larger quantity of the good is supplied.
D)the price rises above the previous equilibrium.

Question

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,
A)​a smaller quantity of the good is exchanged.
B)​a smaller quantity of the good is demanded.
C)​a larger quantity of the good is supplied.
D)​the price rises above the previous equilibrium.

Quizplus · Accepted Answer

When a price ceiling is imposed on a market, the price is set below the equilibrium price. As a result, there is excess demand for the good, meaning that the quantity demanded exceeds the quantity supplied. This leads to a smaller quantity of the good being exchanged, as some potential buyers may be unable to find sellers willing to sell at the ceiling price.

Which of the Following Observations Would Be Consistent with the Imposition