Question

A government-imposed price ceiling, below the equilibrium price, in the market for a good or service will result in which of the following? a. A surplus of that good or service b. A shortage of that good or service c. Lower prices for consumers d. Equilibrium

Answer 1

Answer:

When the government imposed the price ceiling in the market below the equilibrium price for any good or service will result into shortage of that particular good or service.

Correct Answer : Option B.

Explanation:

When the government imposed the price ceiling in the market below the equilibrium price for any good or service will result into shortage of that particular good or service because that will create an excess demand for that particular product.

As a result of the excess demand of the good or service, the demand curve will tend to shift to the right and the supply curve will shift to the left. This will therefore, creates the excess demand of the good or service and thereby letting the shortage of the good or service.

Answer 2

Price ceiling can be defined as the highest price a seller can charge from the customer for a particular product or service.

Explanation:

• Price ceiling is  a legal limit (on the price) imposed on a product or service by the government .

• Rent control is an example of price ceiling

• Price ceiling is usually imposed on staple food items

• If the government imposed a price ceiling below the equilibrium price then their will a surplus of goods or services