Which of the following is true for a price ceiling?
A) A price ceiling is a limit below which it is illegal to set a price.
B) A price ceiling usually leads to a shortage in a market.
C) A price ceiling is usually set above the equilibrium price.
D) A price ceiling is usually set for goods like alcohol to curb excess consumption.

Question

Quizplus · Accepted Answer

A price ceiling, when set below the equilibrium price, leads to a shortage in the market because the quantity demanded exceeds the quantity supplied at that price. This is a common outcome as the ceiling is intended to make the goods or services more affordable, but it disrupts the natural market balance.

Which of the Following Is True for a Price Ceiling