Question:
When a price ceiling is imposed in a market,
(1) a persistent shortage results.
(2) a persistent surplus results.
(3) sellers of the product are made better off.
(4) no one is made better off.
(5) quantity supplied is greater than the quantity demanded.
Correct Answer:
(1)
Answer Explanation:
An effective price ceiling is set below the natural market equilibrium. At this artificially low price, the quantity demanded by consumers greatly exceeds the quantity supplied by producers, resulting in a persistent market shortage.
Topic: Price Controls Year: 2020
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