Which would MOST LIKELY result after setting a price ceiling on automobiles?
A) a surplus of automobiles
B) more friendly automobile salesmen
C) fewer safety features
D) an increase in demand for automobiles

Question

Quizplus · Accepted Answer

Setting a price ceiling means that the maximum price that can be charged for an automobile is set lower than the market equilibrium price. This typically results in a shortage of automobiles because the quantity demanded exceeds the quantity supplied. To compensate for this, producers may reduce their costs by cutting back on safety features, which can lead to a decrease in the quality of automobiles. Therefore, option C is the most likely outcome. The other options are not likely to occur as setting a price ceiling does not directly affect the behavior of salesmen, the quantity of automobiles supplied, or the demand for automobiles.

Which Would MOST LIKELY Result After Setting a Price Ceiling