Question

A shortage will result whenever the:

Answer 1

Answer:

A shortage will result whenever the: c. Government imposes a price ceiling below the equilibrium price.

Explanation:

A shortage happens when the supply of a product is not enough to satisfy its demand.

Remember that the equilibrium price means that there is no shortage or excess - the quantity supplied of a product is exactly the same as the demanded quantity.

Now, keeping this in mind:

a. The government imposes a price floor above the equilibrium price: This means that the product is too expensive, so there will not be enough demand for the supplied good.

b. The government imposes a price floor below the equilibrium price: The price floor is cheaper than the equilibrium price, and in that case a shortage would occur. However, the market can still reach its equilibrium point since the restriction is on the minimum price (and not the maximum). Goods can still be legally sold at their equilibrium price.

c. The government imposes a price ceiling below the equilibrium price: In this case, a shortage would happen, since the demand of the product would rise given that legally it's cheaper than its equilibrium price.

d. The quantity supplied exceeds the quantity demanded: This would be basically the same as case a.