The quantity exchanged of a good ______ under a binding price ceiling.
A) rises
B) remains the same
C) falls
D) changes in an indeterminate direction

Question

Quizplus · Accepted Answer

When a price ceiling is implemented, the legal maximum price is below the equilibrium price. This leads to excess demand, as consumers demand more of the good than producers are willing to supply at the artificially low price. As a result, the quantity of the good exchanged falls below the equilibrium quantity.

The Quantity Exchanged of a Good ______ Under a Binding