Which of the following will most likely occur when government price controls fix the price of a good above market equilibrium?
A) Waiting lines to buy the good will develop.
B) The quality of the good will deteriorate.
C) Consumers will buy more than they would at the market equilibrium price.
D) A surplus of the good will develop.

Question

Quizplus · Accepted Answer

When the government sets the price of a good above the market equilibrium, a surplus of the good will develop because suppliers are willing to supply more of the good than consumers are willing to buy at the higher price. This surplus may lead to waste as suppliers may have to dispose of excess inventory or cut costs, but it will not result in waiting lines or a deterioration in quality as consumers will not be willing to buy as much of the good at the higher price.

Which of the Following Will Most Likely Occur When Government