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 bought and sold.
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

Quizplus · Accepted Answer

Imposing a price ceiling means that the price cannot go above a certain level. This leads to a situation where the price is below the equilibrium price, causing a shortage in the market. As a result, less of the good is bought and sold. Therefore, choice A is the correct answer. Choice B is incorrect because the quantity demanded may not necessarily decrease, but the quantity supplied will decrease due to the shortage. Choice C is also incorrect because the quantity supplied will likely decrease due to the lower price ceiling. Choice D is incorrect because the price cannot rise above the price ceiling.

Which of the Following Observations Would Be Consistent with the Imposition