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Why does a price ceiling set below
the equilibrium price result in a shortage?

User Candost
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1 Answer

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Answer:

Price ceilings are enacted in an attempt to keep prices low for those who demand the product—be it housing, prescription drugs, or auto insurance. But when the market price is not allowed to rise to the equilibrium level, quantity demanded exceeds quantity supplied, and thus a shortage occurs.

User Loyal
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